DEF 14A 1 d74377ddef14a.htm DEF 14A DEF 14A
Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the Securities

Exchange Act of 1934 (Amendment No. )

         LOGO  Filed by the Registrant                                         LOGO  Filed by a Party other than the Registrant

 

 

Check the appropriate box:

 

LOGO

 

  

Preliminary Proxy Statement

 

 

LOGO

 

  

Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

 

 

LOGO

 

  

Definitive Proxy Statement

 

 

LOGO

 

  

Definitive Additional Materials

 

 

LOGO

 

  

Soliciting Material Pursuant to §.240.14a-12

 

 

LOGO

CHEVRON CORPORATION

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

 

Payment of Filing Fee (Check the appropriate box):

 

LOGO

 

  

No fee required.

 

 

LOGO

 

  

Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

 

    

 

(1) Title of each class of securities to which transaction applies:

    

 

(2) Aggregate number of securities to which transaction applies:

    

 

(3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):

    

 

(4) Proposed maximum aggregate value of transaction:

    

 

(5) Total fee paid:

 

LOGO

  

 

Fee paid previously with preliminary materials.

 

LOGO

  

 

Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

    

 

(1) Amount Previously Paid:

    

 

(2) Form, Schedule or Registration Statement No.:

    

 

(3) Filing Party:

    

 

(4) Date Filed:


Table of Contents

 

 

LOGO

2021 proxy statement

notice of 2021 annual meeting of stockholders to be held on may 26, 2021

 

 

 


Table of Contents

2021 notice of the chevron corporation

annual meeting of stockholders

wednesday, may 26, 2021

8:00 a.m. PDT

Online by live audio webcast (www.virtualshareholdermeeting.com/CVX2021)

record date

Monday, March 29, 2021

agenda

 

 

Elect 12 Directors named in this Proxy Statement;

 

 

Vote on a Board proposal to ratify the appointment of PricewaterhouseCoopers LLP (“PwC”) as our independent registered public accounting firm for 2021;

 

 

Vote on a Board proposal to approve, on an advisory basis, Named Executive Officer (“NEO”) compensation;

 

 

Vote on six stockholder proposals, each if properly presented at the meeting; and

 

 

Transact any other business that is properly presented at the meeting by or at the direction of the Board.

admission

Stockholders or their legal proxy holders may attend the 2021 Annual Meeting of Stockholders.

 

 

important notice regarding admission to the 2021 annual meeting

 

Virtual Annual Meeting

 

We are pleased to announce that the Company will conduct its 2021 Annual Meeting of Stockholders (“Annual Meeting”) on the above date and time solely by live audio webcast in lieu of an in-person meeting. Your Board believes this format will enhance and facilitate attendance by providing convenient access for all of our stockholders. In addition, this meeting format will eliminate public health concerns around the COVID-19 pandemic and the significant costs associated with holding an in-person meeting. We have planned and designed the meeting to encourage stockholder participation, protect stockholder rights, and promote transparency.

 

We encourage participation

 

Stockholders of record owning Chevron common stock at the close of business on Monday, March 29, 2021, are entitled to participate in and vote at the Annual Meeting. To participate in the Annual Meeting, including to vote, ask questions, and view the list of registered stockholders as of the record date during the meeting, stockholders should go to the meeting website at www.virtualshareholdermeeting.com/CVX2021, enter the 16-digit control number found on your proxy card, voting instruction form, or Notice Regarding the Availability of Proxy Materials, and follow the instructions on the website. If your voting instruction form or Notice Regarding the Availability of Proxy Materials does not indicate that you may vote those shares through the www.proxyvote.com website and it does not include a 16-digit control number, you should contact your bank, broker, or other nominee (preferably at least 5 days before the annual meeting) and obtain a “legal proxy” in order to be able to attend, participate in, or vote at the Annual Meeting. The Annual Meeting will be opened for access beginning at 7:45 a.m. PDT on May 26, 2021. Proponents of the stockholder proposals included in this Proxy Statement will be given the option to prerecord or call in live through a dedicated line to ensure their ability to present their proposals.

 

We welcome questions from stockholders

 

Questions may be submitted in advance of the meeting at www.proxyvote.com or live during the meeting at www.virtualshareholdermeeting.com/CVX2021. If we are not able to get to every question submitted, we will post a summary of the remaining questions and answers on www.chevron.com/investors/stockholder-services.

 

Technical difficulties and additional questions

 

If you have difficulty accessing the Annual Meeting, please call 844-976-0738 (toll free) or 303-562-9301 (international). Technicians will be available to assist you. Please submit any additional questions, comments, or suggestions by email at corpgov@chevron.com or by telephone by calling 1-877-259-1501.

 

In the event of a technical malfunction or other situation that the meeting Chair determines may affect the ability of the meeting to satisfy the requirements for a stockholder meeting to be held by means of remote communication under the Delaware General Corporation Law, or that otherwise makes it advisable to adjourn the meeting, the Chair will convene the Annual Meeting at 8:30 a.m. PDT on the date specified above at the Company’s headquarters in San Ramon, California, solely for the purpose of adjourning the meeting to reconvene at a date, time, and physical or virtual location announced by the meeting Chair. Under either of the foregoing circumstances, we will post information regarding the announcement on the investor relations page of the Company’s website at www.chevron.com/investors/stockholder-services.

 


Table of Contents

voting

Stockholders owning Chevron common stock at the close of business on Monday, March 29, 2021, or their legal proxy holders, are entitled to vote at the Annual Meeting. Please refer to pages 93 through 94 of this Proxy Statement for information about voting at the Annual Meeting.

distribution of proxy materials

On Thursday, April 8, 2021, we will commence distributing to our stockholders (1) a copy of this Proxy Statement, a proxy card or voting instruction form, and our Annual Report (the “Proxy Materials”), (2) a Notice Regarding the Availability of Proxy Materials, with instructions to access the Proxy Materials and vote on the internet, or (3) for stockholders who receive materials electronically, an email with instructions to access the Proxy Materials and vote on the internet.

By Order of the Board of Directors,

 

LOGO

Mary A. Francis

Corporate Secretary and Chief Governance Officer


Table of Contents

LOGO

April 8, 2021

Dear Stockholder,

A year ago, we knew 2020 was going to present a unique challenge. Chevron demonstrated both agility and resilience in adjusting to extreme market conditions, balancing short-term cash flow and long-term value. We intend to build on our track record of capital and cost discipline to deliver higher returns and lower carbon.

Our focus on higher returns is underpinned by a strong balance sheet, a dividend that is our first financial priority, and the transformation of our business to work more efficiently and effectively. This is built upon an advantaged portfolio that was further enhanced by the Noble Energy acquisition.

We recognize the need to deliver value for our stockholders and, at the same time, to help the world move toward a lower-carbon energy system. So we are focused on lowering our carbon intensity cost efficiently, increasing renewables and offsets in support of our business, and investing in low-carbon technologies that enable commercial solutions.

Chevron’s latest Climate Change Resilience Report released last month lays out our perspective, strategy, actions and policy positions for a lower-carbon future. We are dedicated to leading the industry on transparent carbon emissions reporting, providing data and facts so stakeholders can see our progress toward the ambitions of the Paris Agreement. Having already exceeded our 2023 metrics, we now expect to achieve a 35 percent carbon intensity reduction by 2028 from 2016. We have also committed to zero routine flaring by 2030. In May 2021, we will release our Corporate Sustainability Report that further details our environmental, social, and governance priorities.

We believe investing in our people and our culture is essential for success. Our human capital management objectives are focused on hiring, developing and retaining critical talent, while fostering a culture that values diversity and inclusion and employee engagement. We believe innovative solutions to the most complex challenges emerge when diverse people, ideas, and experiences come together in an inclusive environment.

We take pride in providing the affordable, reliable, ever-cleaner energy that billions of people rely on every day. As the world emerges from a year of unprecedented challenges, we intend to continue to demonstrate Chevron’s consistent, prepared, and adaptive strengths as we move into the future.

We appreciate your investment in Chevron.

Sincerely,

 

LOGO

 

Michael K. Wirth

Chairman and CEO

    

LOGO

 

Ronald D. Sugar

Lead Director

 

 

 

Chevron Corporation

6001 Bollinger Canyon Road, San Ramon, CA 94583


Table of Contents

 

table of contents

 

 

 

proxy statement      1  

virtual annual meeting

     1  

items of business

     1  
election of directors (item 1 on the proxy card)      2  

director election requirements

     2  

director qualifications and nomination processes

     2  

nominees for director

     5  

vote required

     17  

your board’s recommendation

     17  
director compensation      18  

overview

     18  

non-employee director compensation

     18  

expenses and charitable matching gift program

     18  

compensation during the fiscal year ended december 31, 2020

     19  
corporate governance      21  

overview

     21  

role of the board of directors

     21  

board leadership structure

     21  

independent lead director

     22  

human capital management

     23  

board oversight of strategy

     25  

board oversight of risk

     25  

board oversight of sustainability

     27  

board oversight of environmental issues

     27  

director independence

     28  

board committees

     29  

board and committee meetings and attendance

     29  

board and committee evaluations

     29  

corporate governance guidelines

     31  

business conduct and ethics code

     31  

hedging, pledging, and other transactions

     31  

environmental, social, and governance engagement

     32  

our response to stockholders

     32  

chevron’s approach to the energy transition

     33  

communicating with the board

     34  

related person transactions

     35  

board nominating and governance committee report

     36  

management compensation committee report

     37  

audit committee report

     37  
executive compensation      38  

compensation discussion and analysis

     38  

summary compensation table

     60  

grants of plan-based awards in fiscal year 2020

     63  

outstanding equity awards at 2020 fiscal year-end

     64  

option exercises and stock vested in fiscal year 2020

     66  

pension benefits table

     68  

nonqualified deferred compensation table

     69  

potential payments upon termination or change-in-control

     72  
equity compensation plan information      74  
CEO pay ratio      75  
board proposal to ratify PricewaterhouseCoopers LLP as the independent registered public accounting firm for 2021 (item 2 on the proxy card)      76  

auditor review and engagement

     76  

PwC’s fees and services

     77  

audit committee preapproval policies and procedures

     77  

PwC’s attendance at the annual meeting

     77  

vote required

     77  

your board’s recommendation

     77  
stock ownership information      78  

security ownership of certain beneficial owners and management

     78  
board proposal to approve, on an advisory basis, named executive officer compensation (item 3 on the proxy card)      79  

vote required

     79  

your board’s recommendation

     79  
rule 14a-8 stockholder proposals (items 4 through 9 on the proxy card)      80  

vote required

     80  

your board’s recommendation

     80  
voting and additional information      93  

vote results

     93  

appointment of proxy holders

     93  

record date; who can vote

     93  

quorum

     93  

how to vote

     94  

revoking your proxy or voting instructions

     94  

confidential voting

     95  

notice and access

     95  

method and cost of soliciting and tabulating votes

     95  

householding information

     96  

email delivery of future proxy materials

     96  

stockholder of record account maintenance

     96  

submission of stockholder proposals for 2022 annual meeting

     97  

rules for admission for the virtual annual meeting

     98  

attending the virtual annual meeting

     98  
 


Table of Contents

cautionary statements relevant to forward-looking information for the purpose of “safe harbor” provisions of the private securities litigation reform act of 1995

The statements in this Proxy Statement, including without limitation those relating to the action areas of Chevron’s energy transition strategy in the “Chevron’s Approach to the Energy Transition” section, are forward-looking statements based on management’s current expectations, estimates and projections and, accordingly, involve risks and uncertainties that could cause actual outcomes and results to differ materially from those expressed or forecasted herein. Words or phrases such as “advances,” “intends,” “plans,” “targets,” “forecasts,” “progress,” “commits,” “believes,” “improves,” “seeks,” “aims,” “sets,” “strives,” “helps,” “estimates,” “positions,” “pursues,” “may,” “could,” “should,” “will,” “budgets,” “outlook,” “trends,” “guidance,” “focus,” “on track,” “approaches,” “goals,” “objectives,” “strategies,” “opportunities,” “potential” and similar expressions are intended to identify such forward-looking statements. Factors that may cause actual results to differ materially from those contemplated by the statements in this Proxy Statement can be found in our most recent Annual Report on Form 10-K filed with the SEC and in the Quarterly Reports on Form 10-Q that we will subsequently file under the headings “Risk Factors” and “Cautionary Statements Relevant to Forward-Looking Information for the Purpose of ‘Safe Harbor’ Provisions of the Private Securities Litigation Reform Act of 1995.” The reader should not place undue reliance on these forward-looking statements, which speak only as of the date of this report. Unless legally required, Chevron undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise.


Table of Contents

 

proxy statement

 

 

Chevron Corporation

6001 Bollinger Canyon Road

San Ramon, CA 94583-2324

Your Board of Directors is providing you with these Proxy Materials in connection with its solicitation of proxies to be voted at Chevron Corporation’s 2021 Annual Meeting of Stockholders to be held by live audio webcast (www.virtualshareholdermeeting.com/CVX2021) on Wednesday, May 26, 2021, at 8:00 a.m. PDT, and at any postponement or adjournment of the Annual Meeting.

In this Proxy Statement, Chevron and its subsidiaries may also be referred to as “we,” “our,” “the Company,” “the Corporation,” or “Chevron.”

virtual annual meeting

We are pleased to announce that the Company will conduct its Annual Meeting on the above date and time solely by live audio webcast in lieu of an in-person meeting. Your Board believes this meeting format will enhance and facilitate attendance by providing convenient access for all of our stockholders. In addition, this meeting format will help eliminate public health concerns around the COVID-19 pandemic and the significant costs associated with holding an in-person meeting. We have planned and designed the meeting to encourage stockholder participation, protect stockholder rights, and promote transparency.

items of business

Your Board is asking you to take the following actions at the Annual Meeting:

 

Item(s)

 

Your Board’s recommendation

 

Vote required

    
Item 1: Elect 12 Directors named in this
Proxy Statement
  Vote FOR  

 

Each Director nominee who receives a majority of the votes cast (i.e., the number of shares voted FOR a Director nominee must exceed the number of shares voted AGAINST that Director nominee, excluding abstentions) will be elected a Director in an uncontested election.

 

   

 

Item 2: Vote to ratify the appointment of the independent registered public accounting firm

 

  Vote FOR  

These items are approved if the number of shares voted FOR exceeds the number of shares voted AGAINST.

   

 

Item 3: Vote to approve, on an advisory
basis, Named Executive Officer
compensation

 

 

Vote FOR

 

Items 4–9: Vote on six stockholder proposals, if properly presented

 

 

 

Vote AGAINST

If you are a street name stockholder (i.e., you own your shares through a bank, broker, or other holder of record) and do not vote your shares, your bank, broker, or other holder of record can vote your shares at its discretion ONLY on Item 2. If you do not give your bank, broker, or other holder of record instructions on how to vote your shares on Item 1 or Items 3 through 9, your shares will not be voted on those matters. If you have shares in an employee stock or retirement benefit plan and do not vote those shares, the plan trustee or fiduciary may or may not vote your shares, in accordance with the terms of the plan. Any shares not voted on Item 1 or Items 3 through 9 (whether by abstention, broker nonvote, or otherwise) will have no impact on that particular item.

We are not aware of any matters that are expected to be presented for a vote at the Annual Meeting other than those described above. If any other matter is properly brought before the Annual Meeting by or at the direction of the Board, the proxy holders identified in the “Voting and Additional Information—Appointment of Proxy Holders” section of this Proxy Statement intend to vote the proxies in accordance with their best judgment. When conducting the Annual Meeting, the Chairman or his designee may refuse to allow a vote on any matter not made in compliance with our By-Laws and the procedures described in the “Voting and Additional Information—Submission of Stockholder Proposals for 2021 Annual Meeting” section of the 2020 Proxy Statement.

 

Chevron Corporation—2021 Proxy Statement       1


Table of Contents

election of directors

(item 1 on the proxy card)

The Board Nominating and Governance Committee (the “Governance Committee”) recommended, and the Board set, a current Board size of 12 Directors. On September 8, 2020, the Board elected Jon Huntsman Jr. as a member of the Board effective September 15, 2020. In addition, on December 2, 2020, the Board elected Marillyn Hewson as a member of the Board effective January 1, 2021. Each of the nominees is a current Director and, other than Gov. Huntsman and Ms. Hewson, was previously elected at Chevron’s 2020 Annual Meeting of Stockholders.

Directors are elected annually and serve for a one-year term or until their successors are elected. If any nominee is unable to serve as a Director—a circumstance we do not anticipate—the Board by resolution may reduce the number of Directors or choose a substitute. Your Board has determined that each non-employee Director is independent in accordance with the New York Stock Exchange (“NYSE”) Corporate Governance Standards and has no material relationship with Chevron other than as a Director.

director election requirements

 

Each Director nominee who receives a majority of the votes cast (i.e., the number of shares voted FOR a Director nominee must exceed the number of shares voted AGAINST that Director nominee, excluding abstentions) will be elected a Director in an uncontested election.

Under Chevron’s By-Laws, in an uncontested election, any Director nominated for re-election who receives more AGAINST votes than FOR votes must submit an offer of resignation to the Board. The Governance     

Committee must then consider all relevant facts and circumstances, including the Director’s qualifications, past and expected future contributions, the overall composition of the Board, and whether Chevron would meet regulatory or similar requirements without the Director, and make a recommendation to the Board on the action to take with respect to the offer of resignation.

 

 

director qualifications and nomination processes

 

The Governance Committee is responsible for recommending to the Board the qualifications for Board membership and for identifying, assessing, and recommending qualified Director candidates for the Board’s consideration. The Board membership qualifications and nomination procedures are set forth in Chevron’s Corporate Governance Guidelines, which are available on our website at www.chevron.com/investors/corporate-governance.

 

All Directors should have the following attributes:

 

   

the highest professional and personal ethics and values, consistent with The Chevron Way and our Business Conduct and Ethics Code, both of which are available on Chevron’s website at www.chevron.com;

 

 

   

a commitment to building stockholder value;

 

 

   

business acumen and broad experience and expertise at the policy-making level in one or more of the skills, qualifications, and experiences delineated below;

 

 

   

the ability to provide insights and practical wisdom based on the individual’s experience or expertise;

 

 

   

sufficient time to effectively carry out duties as a Director; and

 

 

   

independence (at least a majority of the Board must consist of independent Directors, as defined by the NYSE Corporate Governance Standards).

 

The Governance Committee regularly reviews the skills and characteristics required of Directors in the context of the current composition of the Board, the changing operating requirements of the Company, and the long-term interests of stockholders.

 

When conducting its review of the appropriate skills and qualifications desired of Directors, the Governance Committee particularly considers:

 

   

leadership experience in business as a chief executive officer, senior executive, or leader of significant business operations;

 

 

   

expertise in science, technology, engineering, research, or academia;

 

 

   

extensive knowledge of governmental, regulatory, legal, or public policy issues;

 

 

   

expertise in finance, financial disclosure, or financial accounting;

 

 

   

experience in global business or international affairs;

 

 

   

experience in environmental affairs (including with respect to climate change issues);

 

 

   

service as a public company director;

 

 

   

diversity of age, gender, and ethnicity; and

 

 

   

such other factors as the Governance Committee deems appropriate, given the current and anticipated needs of the Board and the Company, to maintain a balance of knowledge, experience, background, and capability.

 
 

 

2       Chevron Corporation—2021 Proxy Statement


Table of Contents
 

 

election of directors  

 

 

 

 

These skills, experiences, and expertise are critical to the Board’s ability to provide effective oversight of the Company and are directly relevant to Chevron’s business, strategy, and operations.

 

 

 

CEO / Senior Executive / Leader of Significant Operations

 

 

 

Chevron employs approximately 47,0001 people in business units throughout the world. Chevron’s operations involve complex organizations and processes, strategic planning, and risk management.

 

 

Science / Technology / Engineering / Research / Academia

 

 

 

 

Technology and engineering are at the core of Chevron’s business and are key to finding, developing, producing, processing, and refining oil and natural gas, as well as assessing new energy sources. Our business processes are complex and highly technical.

 

 

Government / Regulatory / Legal / Public Policy

 

 

 

 

Chevron’s operations require compliance with a variety of regulatory requirements in numerous countries and involve relationships with various governmental entities and nongovernmental organizations throughout the world.

 

 

Finance / Financial Disclosure / Financial Accounting

 

 

 

 

Chevron’s business is multifaceted and requires complex financial management, capital allocation, and financial reporting processes.

 

 

Global Business / International Affairs

 

 

 

 

Chevron conducts business around the globe. Our business success is derived from an understanding of diverse business environments, economic conditions, and cultures and a broad perspective on global business opportunities.

 

 

Environmental

 

 

 

 

We place the highest priority on the health and safety of our workforce and the protection of our assets, the communities where we operate, and the environment. We are committed to continuously improving our environmental performance and reducing the potential impacts of our operations.

 

 

 

 

1

As of February 28, 2021.

The following matrix displays the most significant skills and qualifications that each Director possesses. The Governance Committee reviews the composition of the Board as a whole periodically to ensure that the Board maintains a balance of knowledge and experience and to assess the skills and characteristics that the Board may find valuable in the future in light of current and anticipated strategic plans and operating requirements and the long-term interest of stockholders.

 

 

LOGO

 

Chevron Corporation—2021 Proxy Statement       3


Table of Contents

 

  election of directors  

 

 

 

The Board seeks to achieve diversity of age, gender, and ethnicity and recognizes the importance of Board refreshment to ensure that it benefits from fresh ideas and perspectives. The following charts demonstrate the Board’s commitment to diversity of backgrounds and Board refreshment.

 

LOGO   LOGO
strong board diversity   strong board refreshment
6 New Directors since 2016*

 

     Date of Change   Director   Reason for Nomination/ Departure

+

  January 2021   Marillyn A. Hewson   Brings valuable global business experience as well as decades of perspective on international commerce and geopolitics

+

  September 2020   Jon M. Huntsman Jr.*   Strong international and public policy experience, knowledge of Chevron’s business, and leadership experience

-

  January 2020   Inge G. Thulin   Time and logistics conflict

+

  December 2018   Debra Reed-Klages   Depth of business leadership and experience with regulated utilities in California

-

  May 2018   Linnet F. Deily   Mandatory Director Retirement Policy

-

  May 2018   Robert E. Denham   Mandatory Director Retirement Policy

-

  February 2018   John S. Watson   Retirement from Chevron

+

  March 2018   D. James Umpleby III   Strong background in international/environmental policy, heavy equipment engineering, and global workforce development

+

  November 2017   John B. Frank   Legal and finance experience, and capital markets and risk management knowledge

-

  September 2017   Jon M. Huntsman Jr.   Nominated as the U.S. Ambassador to Russia

+

  February 2017   Michael K. Wirth   CEO succession planning

 

*

Jon M. Huntsman Jr. previously served on Chevron’s Board but resigned to serve as U.S. Ambassador to Russia. For purposes of calculating tenure going forward, we include only his current term.

The Governance Committee considers Director candidates suggested for nomination to the Board from stockholders, Directors, and other sources. Directors periodically suggest possible candidates, and, from time to time, the Governance Committee may engage a third-party consultant to assist in identifying potential candidates. The Governance Committee has retained director search firms to assist with identifying potential candidates. Ms. Hewson was recommended by a search firm, and Gov. Huntsman was contacted by members of our Board upon his departure from his service as U.S. Ambassador to Russia. Both were reviewed and recommended by our independent Governance Committee.

 

The Governance Committee considers all potential nominees recommended by our stockholders.

 

   

Stockholders may recommend potential nominees by writing to the Corporate Secretary at 6001 Bollinger Canyon Road, San Ramon, CA 94583-2324, stating the candidate’s name and qualifications for Board membership.

 

 

   

When considering potential nominees recommended by stockholders, the Governance Committee follows the same Board membership qualifications evaluation and nomination procedures discussed in this section.

 

 

In addition, a qualifying stockholder (or stockholders) may nominate director nominees by satisfying the requirements specified in our By-Laws, which are described in the “Voting and Additional Information—Submission of Stockholder Proposals for 2022 Annual Meeting” section of this Proxy Statement.

 

 

4       Chevron Corporation—2021 Proxy Statement


Table of Contents
 

 

election of directors  

 

 

 

 

nominees for director

The Governance Committee recommended, and the Board set, a current Board size of 12 Directors. Each of the Director nominees is a current Director.

Director Summary

 

                         Committee Composition(1)     
Director  

Director

Age(1)

 

Director

Since

 

Principal

Occupation

  IND(2)   AC(3)   BN&GC(4)   MCC(5)   PP&SC(6)  

Other Current

Public Company Directorships

Wanda M. Austin   66   2016   Retired President and CEO, The Aerospace Corporation   l     M     C  

• Amgen, Inc.

• Virgin Galactic Holdings, Inc.

John B. Frank   64   2017  

Vice Chairman,

Oaktree Capital Group, LLC

  l   M        

• Oaktree Capital Group, LLC

¡  Oaktree Acquisition Corporation II

¡ Oaktree Specialty Lending Corporation

Alice P. Gast   62   2012  

President,

Imperial College London

  l     M     M  

• None

Enrique Hernandez, Jr.   65   2008  

Chairman and CEO,

Inter-Con Security Systems, Inc.

  l       C   M  

• McDonald’s Corporation

Marillyn A. Hewson   67   2021   Retired Chairman, CEO, and President of Lockheed Martin Corporation   l   M        

• Johnson & Johnson

Jon M. Huntsman Jr.(7)   61   2020   Former U.S. Ambassador to Russia and China and former Governor of Utah   l       M   M  

• Ford Motor Company

Charles W. Moorman IV   69   2012  

Senior advisor to Amtrak

Retired Chairman and CEO, Norfolk Southern Corporation

  l   C        

• Oracle Corporation

Dambisa F. Moyo   52   2016  

CEO,

Mildstorm LLC

  l   M        

• 3M Company

Debra Reed-Klages   64   2018   Retired Chairman, CEO, and President, Sempra Energy   l   M        

• Caterpillar Inc.

• Lockheed Martin Corporation

Ronald D. Sugar       72   2005   Retired Chairman and CEO, Northrop Grumman Corporation   L     C   M    

• Amgen Inc.

• Apple Inc.

• Uber Technologies, Inc.

D. James Umpleby III   63   2018  

Chairman and CEO,

Caterpillar Inc.

  l     M   M    

• Caterpillar Inc.

Michael K. Wirth   60   2017  

Chairman and CEO,

Chevron Corporation

                     

• None

 

(1)

As of April 8, 2021.

 

(2)

Independent in accordance with the NYSE Corporate Governance Standards. No material relationship exists with Chevron other than as a Director.

 

(3)

Audit Committee

 

(4)

Board Nominating and Governance Committee

 

(5)

Management Compensation Committee

 

(6)

Public Policy and Sustainability Committee

 

(7)

Previously served as a Director of the Company from January 15, 2014 to September 28, 2017.

L

   Lead Director (Independent)

C

   Committee Chair

M

  

Committee Member

 

 

Your Board recommends that you vote FOR each of these Director nominees.

 

Chevron Corporation—2021 Proxy Statement       5


Table of Contents

 

  election of directors  

 

 

 

LOGO

  

Wanda M. Austin

 

Retired President and Chief Executive
Officer, The Aerospace Corporation    

 

Age: 66

Director Since: December 2016

Independent: Yes

 

Chevron Committees:

 

•  Board Nominating and Governance

•  Public Policy and Sustainability (Chair)

 

Current Public Company Directorships:

 

•  Amgen Inc.

•  Virgin Galactic Holdings, Inc.

 

 

 

Prior Public Company Directorships

(within last five years):

 

•  None

 

Other Directorships and Memberships:

 

•  Horatio Alger Association

•  National Academy of Engineering

•  University of Southern California (transitions to Life Trustee as of May 15, 2021)

Dr. Austin has held an adjunct Research Professor appointment at the University of Southern California’s Viterbi School’s Department of Industrial and Systems Engineering since 2007. She has been Co-founder and Chief Executive Officer of MakingSpace, Inc., a leadership and STEM (science, technology, engineering, and math) consulting firm, since December 2017. She is a World 50 executive advisor, fostering peer-to-peer discussions among senior executives from some of the world’s largest companies. She served as Interim President of the University of Southern California from August 2018 until July 2019. She served as President and Chief Executive Officer of The Aerospace Corporation (“Aerospace”), a leading architect for the United States’ national security space programs, from 2008 until her retirement in 2016. From 2004 to 2007, she was Senior Vice President, National Systems Group, at Aerospace. Dr. Austin joined Aerospace in 1979.

skills and qualifications

 

Business Leadership / Operations: Eight years as CEO of Aerospace. Thirty-seven-year career with Aerospace included numerous senior management and executive positions. CEO of MakingSpace, Inc., since December 2017.

Finance: More than a decade of financial responsibility and experience at Aerospace. Audit Committee member at Amgen Inc.

Global Business / International Affairs: Internationally recognized for her work in satellite and payload system acquisition, systems engineering, and system simulation. Former CEO of a company that provides space systems expertise to international organizations. Director of companies with international operations.

Government / Regulatory / Public Policy: Served on the President’s Council of Advisors on Science and Technology and the President’s Review of U.S. Human Space Flight Plans Committee. Appointed to the Defense Policy Board, the Defense Science Board, and the NASA Advisory Council.

Science / Technology / Engineering: Ph.D. in Industrial and Systems Engineering from the University of Southern California, Master of Science in both Systems Engineering and Mathematics from the University of Pittsburgh. Thirty-seven-year career in national security space programs. Director at Amgen Inc., a biotechnology company, and Virgin Galactic Holdings, Inc., the world’s first commercial space line and vertically integrated aerospace company. Fellow of the American Institute of Aeronautics and Astronautics. Member of the National Academy of Engineering.

Research / Academia: Adjunct Research Professor at the University of Southern California’s Viterbi School of Engineering. Former Interim President of the University of Southern California.

 

6       Chevron Corporation—2021 Proxy Statement


Table of Contents
 

 

election of directors  

 

 

 

 

LOGO   

John B. Frank

Vice Chairman, Oaktree Capital Group, LLC

 

Age: 64

Director Since: November 2017

Independent: Yes

 

Chevron Committees:

 

•  Audit – audit committee financial expert

 

Current Public Company Directorships:

 

•  Oaktree Capital Group, LLC

¡   Oaktree Acquisition Corporation II

¡  Oaktree Specialty Lending Corporation

 

 

Prior Public Company Directorships

(within last five years):

 

•  None

 

Other Directorships and Memberships:

 

•  The James Irvine Foundation

•  Wesleyan University

•  XPRIZE Foundation

Mr. Frank has been Vice Chairman since 2014, and Director since 2007, of Oaktree Capital Group, LLC (“Oaktree Capital”), a global investment management company with expertise in credit strategies. He is one of four members of Oaktree Capital’s Executive Committee and was previously the firm’s principal executive officer. Mr. Frank was Oaktree Capital’s Managing Principal from 2005 until 2014, having joined Oaktree Capital in 2001 as General Counsel. Prior to that, he served as a Partner of the Los Angeles law firm of Munger, Tolles & Olson LLP, where his practice focused on mergers and acquisitions and general corporate counseling.

skills and qualifications

 

 

Business Leadership / Operations: Over 20 years of service as senior executive of Oaktree Capital, a global investment management company, including service as principal executive officer, Vice Chairman, Director, Managing Principal, and General Counsel.

Finance: More than 21 years of financial responsibility and experience as a senior executive at Oaktree Capital, and as the partner responsible for financial affairs at the law firm of Munger, Tolles and Olson LLP.

Global Business / International Affairs: Senior executive of Oaktree Capital, which conducts business worldwide from 18 offices around the globe. Travels around the world to meet with Oaktree Capital’s institutional clients and speak at international investment forums. Director of companies with international operations.

Government / Regulatory / Public Policy: Two decades of experience working with government officials regarding regulatory and public policy issues, including testimony before the U.S. Senate Finance Committee and as a senior executive of Oaktree Capital. Served as a Legislative Assistant to the Honorable Robert F. Drinan, Member of Congress, and as a law clerk to the Honorable Frank M. Coffin of the U.S. Court of Appeals for the First Circuit.

Legal: Served as General Counsel of Oaktree Capital. Former Partner of Munger, Tolles & Olson LLP. Extensive experience with mergers and acquisitions and strategic, financial, and corporate governance issues. Law degree from the University of Michigan.

 

Chevron Corporation—2021 Proxy Statement       7


Table of Contents

 

  election of directors  

 

 

 

LOGO

  

Alice P. Gast

President, Imperial College London

 

Age: 62

Director Since: December 2012

Independent: Yes

 

Chevron Committees:

 

•  Board Nominating and Governance

•  Public Policy and Sustainability

 

Current Public Company Directorships:

 

•  None

 

 

Prior Public Company Directorships

(within last five years):

 

•  None

 

Other Directorships and Memberships:

 

•  National Academy of Engineering

•  Royal Academy of Engineering

Dr. Gast has been President of Imperial College London, a public research university specializing in science, engineering, medicine, and business, since 2014. She was President of Lehigh University, a private research university, from 2006 until 2014 and Vice President for Research, Associate Provost, and Robert T. Haslam Chair in Chemical Engineering at Massachusetts Institute of Technology from 2001 until 2006. Dr. Gast was professor of chemical engineering at Stanford and the Stanford Synchrotron Radiation Laboratory from 1985 until 2001.

skills and qualifications

 

 

Environmental Affairs: At Imperial College London, oversees environmental institutes and centers and leads the university crisis management group. At Lehigh University, presided over environmental centers, advisory groups, and crisis management. Expertise in chemical and biological terrorism issues gained through service on several governmental committees.

Finance: Fifteen years of service as president of leading educational institutions, with ultimate responsibility for finance, fundraising, and endowment management.

Global Business / International Affairs: Served as a U.S. Science Envoy for the U.S. Department of State to advise on ways to foster and deepen relationships with the Caucasus and Central Asia. Serves on the Singapore Ministry of Education’s Academic Research Council and on the Global Federation of Competitiveness Councils. Served on the Board of Trustees for the King Abdullah University of Science and Technology in Saudi Arabia.

Government / Regulatory / Public Policy: Served on the Homeland Security Science and Technology Advisory Committee. Chaired the scientific review committee empaneled by the National Research Council at the request of the FBI to conduct an independent review of the investigatory methods used by the FBI in the criminal case involving the mailing of anthrax spores. Served on the Board of UKRI, the UK Research and Innovation funding and policy body.

Research / Academia: More than three decades of service in academia and research at leading educational institutions.

Science / Technology / Engineering: M.A. and Ph.D. in chemical engineering from Princeton University. Former Vice President for Research, Associate Provost, and Robert T. Haslam Chair in Chemical Engineering at Massachusetts Institute of Technology and professor of chemical engineering at Stanford University and the Stanford Synchrotron Radiation Laboratory. Member of the National Academy of Engineering and the Royal Academy of Engineering.

 

8       Chevron Corporation—2021 Proxy Statement


Table of Contents
 

 

election of directors  

 

 

 

 

LOGO

  

Enrique Hernandez, Jr.

Chairman and Chief Executive Officer, Inter-Con Security Systems, Inc.

 

Age: 65

Director Since: December 2008

Independent: Yes

 

Chevron Committees:

 

•  Management Compensation (Chair)

•  Public Policy and Sustainability

 

Current Public Company Directorships:

 

•  McDonald’s Corporation

 

 

 

Prior Public Company Directorships

(within last five years):

 

•  Nordstrom, Inc.

•  Wells Fargo & Company

 

Other Directorships and Memberships:

 

•  Catalyst

•  Harvard College Visiting Committee

•  Harvard University Resources Committee

•  John Randolph Haynes and Dora Haynes Foundation

•  Ronald McDonald House Charities

 

Mr. Hernandez has been Chairman and Chief Executive Officer of Inter-Con Security Systems, Inc. (“Inter-Con”), a global provider of security and facility support services to governments, utilities, and industrial customers, since 1986. He was President of Inter-Con from 1986 until 2018 and was previously Executive Vice President and Assistant General Counsel from 1984 until 1986. He was an associate of the law firm of Brobeck, Phleger & Harrison from 1980 until 1984.

skills and qualifications

 

 

Business Leadership / Operations: More than three decades as Chairman and CEO of Inter-Con. Co-founder of Interspan Communications, a television broadcasting company. Chairman of the Board of McDonald’s Corporation.

Finance: More than three decades of financial responsibility and experience at Inter-Con. Chaired the Audit Committee at McDonald’s Corporation. Former Chair of the Finance Committee and the Risk Committee at Wells Fargo & Company. Former Audit Committee member at Great Western Financial Corporation, Nordstrom, Inc., Washington Mutual, Inc., and Wells Fargo & Company.

Global Business / International Affairs: CEO of a company that conducts business worldwide. Current and former director of companies with international operations.

Government / Regulatory / Public Policy: Trustee of the John Randolph Haynes Foundation, which has funded hundreds of important urban studies in education, transportation, local government elections, public safety, and other public issues. Former appointee and Commissioner and President of the Los Angeles Police Commission. Served on the U.S. National Infrastructure Advisory Committee.

Legal: Served as Executive Vice President and Assistant General Counsel of Inter-Con. Former litigation associate of the law firm of Brobeck, Phleger & Harrison. Law degree from Harvard Law School.

 

Chevron Corporation—2021 Proxy Statement       9


Table of Contents

 

  election of directors  

 

 

 

LOGO   

Marillyn A. Hewson

Retired Chairman, President, and Chief Executive Officer of Lockheed Martin Corporation

 

Age: 67

Director Since: January 2021

Independent: Yes

 

Chevron Committees:

 

•  Audit – audit committee financial expert

 

Current Public Company Directorships:

 

•  Johnson & Johnson

 

 

Prior Public Company Directorships

(within last five years):

 

•  DuPont, DowDuPont Inc.

•  Lockheed Martin Corporation

 

Other Directorships and Memberships:

 

•  Catalyst (Chair)

•  United Service Organizations (USO)

•  Culverhouse College of Commerce & Business Administration, University of Alabama Board of Visitors

•  University of Alabama’s President’s Cabinet

 

Ms. Hewson has been strategic advisor to the CEO of Lockheed Martin Corporation (“Lockheed Martin”), a security and aerospace company principally engaged in the research, design, development, manufacture, integration and sustainment of advanced technology systems, products, and services since March 2021. She served as Executive Chairman from June 2020 to March 2021, and as Lockheed Martin’s Chairman, President and Chief Executive Officer from January 2014 to June 2020 and held the positions of President and Chief Executive Officer from January 2013 to December 2013. Ms. Hewson joined Lockheed Martin in 1983 as an industrial engineer and has held leadership positions across Lockheed Martin, including President and Chief Operating Officer and Executive Vice President of Lockheed Martin’s Electronic Systems business area.

skills and qualifications

 

 

Business Leadership / Operations: Served six years as Chairman, President, and CEO of Fortune 100 company. Thirty-eight-year career with Lockheed Martin included numerous senior management and executive positions, including over seven years as President and CEO.

Environmental Affairs: As Chairman, CEO, and President of Lockheed Martin, oversaw initiatives for energy and environmental stewardship, including Go Green, carbon and energy reduction, and water use reduction, and partnered with the United States Department of Energy’s Better Plants Program, and the Environmental Protection Agency’s ENERGY STAR Program and Green Power Partnerships.

Finance: Former Chairman, President, and CEO of Fortune 100 company. More than three decades of financial responsibility and experience at Lockheed Martin.

Global Business / International Affairs: Former Chairman, President and CEO of Fortune 100 company with extensive international operations. Served on the Board of Trustees for the King Abdullah University Science and Technology in Saudi Arabia and Khalifa University in the United Arab Emirates. Current and former director of companies with international operations.

Government / Regulatory / Public Policy: At Lockheed Martin, a government contractor, oversaw development and production of military and rotary-wing aircraft for all five branches of the U.S. armed forces along with military services and commercial operations. Serves on the American Workforce Policy Advisory Board. Appointed by the President of the United States to the President’s Export Council.

Science / Technology / Engineering: Served in a variety of senior management and executive positions at Lockheed Martin, a leading aerospace and advanced technology company, which positions required expertise in engineering and technology. Former director of DowDuPont, a global chemical company, and Chair of Sandia National Laboratories, one of three National Nuclear Security Administration research and development laboratories in the United States. Former Chair of the Aerospace Industries Association, Fellow of the Royal Aeronautical Society, and Associate Fellow of the American Institute of Aeronautics and Astronautics.

 

10       Chevron Corporation—2021 Proxy Statement


Table of Contents
 

 

election of directors  

 

 

 

 

LOGO   

Jon M. Huntsman Jr.

Former U.S. Ambassador to Russia and China and former Governor of Utah

 

Age: 61

Director Since: September 2020

Independent: Yes

 

Chevron Committees:

 

•  Management Compensation

•  Public Policy and Sustainability

 

Current Public Company Directorships:

 

•  Ford Motor Company

 

 

Prior Public Company Directorships

(within last five years):

 

•  Caterpillar, Inc.

•  Hilton Worldwide Holdings Inc.

 

Governor Huntsman is an American businessman, diplomat, and politician who served as U.S. Ambassador to Russia from 2017 to 2019. He served as Chairman of the Atlantic Council, a nonprofit that promotes leadership and engagement in international affairs from 2014 until 2017. He has served in the administrations of five Presidents and was a candidate for the Republican nomination for president of the United States in 2011. He was Chairman of the Huntsman Cancer Foundation, a nonprofit organization that financially supports research, education and patient care initiatives at Huntsman Cancer Institute at the University of Utah from 2012 until 2017. Governor Huntsman served as U.S. Ambassador to China from 2009 until 2011 and two consecutive terms as Governor of Utah from 2005 until 2009. Prior to his service as Governor, he served as U.S. Ambassador to Singapore, Deputy U.S. Trade Representative, and Deputy Assistant Secretary of Commerce for Asia.

skills and qualifications

 

 

Business Leadership / Operations: Served eight years as Vice Chairman of Huntsman Corporation and Chairman and CEO of Huntsman Holdings Corporation.

Environmental Affairs: As Governor of Utah, oversaw environmental policy, including signing the Western Climate Initiative, by which Utah joined with other U.S. state governments to pursue targets for reduced greenhouse gas emissions. Significant experience overseeing environmental practices and related matters as Vice Chairman of Huntsman Corporation and Chairman and CEO of Huntsman Holdings Corporation. Sustainability and Innovation Committee member at Ford Motor Company.

Finance: Former executive officer of Huntsman Corporation and Huntsman Holdings Corporation.

Global Business / International Affairs: Former U.S. Ambassador to Russia. Former Chairman of the Atlantic Council. Former Trustee of the National Committee on US-China Relations and of the Carnegie Endowment for International Peace. Former U.S. Ambassador to China. Former U.S. Ambassador to Singapore, Deputy U.S. Trade Representative, and Deputy Assistant Secretary of Commerce for Asia. Founding director of the Pacific Council on International Policy. Current and former director of companies with international operations.

Government / Regulatory / Public Policy: Former two-term Governor of Utah. Former Deputy U.S. Trade Representative and Deputy Assistant Secretary of Commerce for Asia. Former Co-Chair of No-Labels, a nonprofit organization that works across political party lines to reduce gridlock and create policy solutions.

 

Chevron Corporation—2021 Proxy Statement       11


Table of Contents

 

  election of directors  

 

 

 

LOGO

  

Charles W. Moorman IV

Senior advisor to Amtrak and Retired Chairman and Chief Executive Officer, Norfolk Southern Corporation

 

Age: 69

Director Since: May 2012

Independent: Yes

 

Chevron Committees:

 

•  Audit (Chair) – audit committee financial expert

 

Current Public Company Directorships:

 

•  Oracle Corporation

 

 

Prior Public Company Directorships 

(within last five years):

 

•  Duke Energy Corporation

 

Other Directorships and Memberships:

 

•  Focused Ultrasound Foundation

•  Georgia Tech Foundation Inc.

•  National Academy of Engineering

•  Nature Conservancy of Virginia

•  Smithsonian National Board

Mr. Moorman has been senior advisor to Amtrak, a passenger rail provider since 2018. He previously served as Amtrak’s co–Chief Executive Officer from July 2017 until his retirement in December 2017, and as President and Chief Executive Officer from September 2016 until July 2017. He was Chairman from 2006, and Chief Executive Officer from 2004, of Norfolk Southern Corporation (“Norfolk Southern”), a freight and transportation company, until his retirement in 2015. He served as President of Norfolk Southern from 2004 until 2013. Prior to that, Mr. Moorman was Senior Vice President of Corporate Planning and Services from 2003 until 2004 and Senior Vice President of Corporate Services in 2003. Mr. Moorman joined Norfolk Southern in 1975.

skills and qualifications

 

 

Business Leadership / Operations: Served more than a decade as CEO of Norfolk Southern. Forty-year career with Norfolk Southern included numerous senior management and executive positions, with emphasis on operations. Senior advisor and former CEO of Amtrak.

Environmental Affairs: At Norfolk Southern, gained experience with environmental issues related to transportation of coal, automotive, and industrial products. Former Virginia chapter chair and current Virginia chapter director of The Nature Conservancy, a global conservation organization. Served as a trustee of the Chesapeake Bay Foundation, whose mission is to protect the environmental integrity of the bay.

Finance: Former Chairman and CEO of Fortune 500 company. More than three decades of financial responsibility and experience at Norfolk Southern.

Government / Regulatory / Public Policy: More than four decades of experience in the highly regulated freight and transportation industry.

Science / Technology / Engineering: Forty-year career with Norfolk Southern included numerous senior management and executive positions requiring expertise in engineering and technology. Norfolk Southern builds and maintains track and bridges, operates trains and equipment, and designs and manages complex information technology systems. Member of the National Academy of Engineering.

 

12       Chevron Corporation—2021 Proxy Statement


Table of Contents
 

 

election of directors  

 

 

 

 

LOGO   

Dambisa F. Moyo

Chief Executive Officer, Mildstorm LLC

 

Age: 52

Director Since: October 2016

Independent: Yes

 

Chevron Committees:

 

•  Audit – audit committee financial expert

 

Current Public Company Directorships:

 

•  3M Company

 

 

Prior Public Company Directorships

(within last five years):

 

•  Barclays plc

•  Barrick Gold Corporation

•  Seagate Technology

 

Other Directorships and Memberships:

•  Condé Naste

•  Department for International Trade Board

Dr. Moyo has been Chief Executive Officer of Mildstorm LLC, a financial and economics firm, since she founded it in 2015. She is a global economist and commentator analyzing the macroeconomy and international affairs. Since 2008, Dr. Moyo has been engaged in researching, speaking, and writing about international macroeconomics. From 2001 to 2008, she worked at Goldman Sachs, a multinational investment bank and financial services company, in various roles, including as an economist. Prior to that she worked at the World Bank, an international financial institution in Washington, D.C., from 1993 until 1995.

skills and qualifications

 

 

Environmental Affairs: As director at Barrick Gold Corporation, served on the committee that considered and provided oversight on environmental matters.

Finance: Ten years of experience at Goldman Sachs and the World Bank. Ph.D. in economics from the University of Oxford and MBA in finance from the American University. Audit Committee member at 3M Company. Former Audit Committee and Risk Committee member at Barrick Gold Corporation.

Global Business / International Affairs: Traveled to more than 80 countries, with a particular focus on the interplay of international business and the global economy, while highlighting key opportunities for investment. Current and former director of companies with international operations.

Government / Regulatory / Public Policy: Ten years of experience in the highly regulated banking and financial services industry. MPA in Public Administration from John F. Kennedy School of Government, Harvard University.

Research / Academia: Author of four New York Times bestsellers. Dr. Moyo’s writing regularly appears in economics and finance-related publications.

 

Chevron Corporation—2021 Proxy Statement       13


Table of Contents

 

  election of directors  

 

 

 

LOGO   

Debra Reed-Klages

Retired Chairman, Chief Executive Officer and President,

Sempra Energy

 

Age: 64

Director Since: December 2018

Independent: Yes

 

Chevron Committees:

 

•  Audit – audit committee financial expert

 

Current Public Company Directorships:

 

•  Caterpillar Inc.

•  Lockheed Martin Corporation

 

 

Prior Public Company Directorships

(within last five years):

 

•  Halliburton Company

•  Oncor Electric Delivery Company LLC

•  Sempra Energy

 

Other Directorships and Memberships:

•  The Trusteeship, International Women’s Forum

•  Rady Children’s Hospital and Health Center

•  Rady Children’s Hospital – San Diego, CA

•  State Farm Mutual Board of Directors

•  University of Southern California Viterbi School of Engineering, Board of Councilors

 

Ms. Reed-Klages served as Chairman from 2012, Chief Executive Officer from 2011, and President from 2017 until her retirement in 2018 from Sempra Energy (“Sempra”), an energy services holding company whose operating units invest in, develop, and operate energy infrastructure and provide electric and gas services to customers in North and South America. Prior to that, she was Executive Vice President of Sempra from 2010 to 2011. From 2006 to 2010, she served as President and Chief Executive Officer of San Diego Gas and Electric and Southern California Gas Co. (“SoCalGas”), Sempra’s regulated California utilities. She joined SoCalGas in 1978 as an energy systems engineer.

skills and qualifications

 

 

Business Leadership / Operations: Served seven years as CEO of Sempra. Over three decades of experience in senior management and executive positions at Sempra, including responsibility for utility and infrastructure operations.

Environmental Affairs: As Chairman and CEO of Sempra, oversaw all aspects of Sempra’s environmental and sustainability policies and strategies, which include initiatives to address challenges like limiting water use, improving the quality and efficiency of operations, infrastructure development and access to energy, human health, and environmental safety.

Finance: Former Chairman and CEO of Fortune 500 company. More than a decade of financial responsibility and experience at Sempra. Former CFO of San Diego Gas & Electric and SoCalGas.

Global Business / International Affairs: Former Chairman and CEO of Fortune 500 company that conducts business in Mexico and South America. Current and former director of companies with international operations.

Government / Regulatory / Public Policy: At Sempra, worked with and adhered to the rules established by the California Public Utilities Commission, the principal regulator of Sempra’s California utilities. Served four years on the National Petroleum Council, a federally chartered advisory committee to the U.S. Secretary of Energy.

Science / Technology / Engineering: B.S. in civil engineering from the University of Southern California. Served in a variety of senior management and executive positions at Sempra, requiring expertise in engineering and technology. Director at Caterpillar, a manufacturer of construction and mining equipment, and Lockheed Martin, a global security and aerospace company.

 

14       Chevron Corporation—2021 Proxy Statement


Table of Contents
 

 

election of directors  

 

 

 

 

LOGO   

Ronald D. Sugar

Retired Chairman and Chief Executive Officer, Northrop Grumman Corporation

 

Lead Director Since: 2015

 

Age: 72

Director Since: April 2005

Independent: Yes

 

Chevron Committees:

 

•  Board Nominating and Governance (Chair)

•  Management Compensation

 

Current Public Company Directorships:

 

•  Amgen Inc.

•  Apple Inc.

•  Uber Technologies, Inc.

 

 

 

Prior Public Company Directorships 

(within last five years):

 

•  Air Lease Corporation

 

Other Directorships and Memberships:

 

•  Los Angeles Philharmonic Association

•  National Academy of Engineering

•  Nexli Building Solutions, Inc.

•  UCLA Anderson School of Management Board of Visitors

•  University of Southern California

Dr. Sugar is a senior advisor to various businesses and organizations, including Ares Management LLC, a private investment firm; Bain & Company, a global consulting firm; Temasek Americas Advisory Panel, a private investment company based in Singapore; and the G100 and World 50 peer-to-peer exchanges for current and former senior executives and directors from some of the world’s largest companies. He is also an advisor to Northrop Grumman Corporation (“Northrop Grumman”), a global aerospace and defense company, and was previously Northrop Grumman’s Chairman and Chief Executive Officer, from 2003 until his retirement in 2010, and President and Chief Operating Officer, from 2001 until 2003. He joined Northrop Grumman in 2001, having previously served as President and Chief Operating Officer of Litton Industries, Inc., a developer of military products, and earlier as an executive of TRW Inc., a developer of missile systems and spacecraft.

skills and qualifications

 

 

Business Leadership / Operations: Served seven years as CEO of Northrop Grumman. Held senior management and executive positions, including service as COO, at Northrop Grumman, Litton Industries, Inc., and TRW Inc.

Environmental Affairs: As Chairman, CEO, and President of Northrop Grumman, oversaw environmental assessments and remediations at shipyards and aircraft and electronics factories.

Finance: Former CFO of Fortune 500 company. More than three decades of financial responsibility and experience at Northrop Grumman, Litton Industries, Inc., and TRW Inc. Current Audit Committee Chair at Apple Inc. and former Audit Committee Chair at Chevron.

Global Business / International Affairs: Former CEO of Fortune 500 company with extensive international operations. Current and former director of companies with international operations.

Government / Regulatory / Public Policy: At Northrop Grumman, a key government contractor, oversaw development of weapons and other technologies. Appointed by the President of the United States to the National Security Telecommunications Advisory Committee. Former director of the World Affairs Council of Los Angeles.

Science / Technology / Engineering: B.S., M.S., and Ph.D. in engineering from the University of California at Los Angeles. Served in a variety of senior management and executive positions at Northrop Grumman, Litton Industries, Inc., and TRW Inc., requiring expertise in engineering and technology. Director at Amgen Inc., a biotechnology company; Apple Inc., a designer, manufacturer, and marketer of, among other things, personal computers and mobile communication and media devices; Uber Technologies, Inc., a technology company; and former director at BeyondTrust, a global cybersecurity company. Member of National Academy of Engineering.

 

Chevron Corporation—2021 Proxy Statement       15


Table of Contents

 

  election of directors  

 

 

 

LOGO   

D. James Umpleby III

Chairman and Chief Executive Officer, Caterpillar Inc.

 

Age: 63

Director Since: March 2018

Independent: Yes

 

Chevron Committees:

 

•  Board Nominating and Governance

•  Management Compensation

 

Current Public Company Directorships:

 

•  Caterpillar Inc.

 

 

Prior Public Company Directorships

(within last five years):

 

•  None

 

Other Directorships and Memberships:

 

•  Business Roundtable

•  The Business Council

•  National Petroleum Council

•  Peterson Institute for International Economics

•  Rose-Hulman Institute of Technology

•  U.S.-China Business Council

•  U.S.-India Strategic Partnership Forum

 

Mr. Umpleby has been Chairman since 2018, and Chief Executive Officer since 2017, of Caterpillar Inc. (“Caterpillar”), a leading manufacturer of construction and mining equipment, diesel and natural gas engines, industrial gas turbines, and diesel-electric locomotives. He was Group President of Caterpillar from 2013 until 2016, with responsibility for Caterpillar’s energy and transportation business segment, and Vice President from 2010 to 2013. He joined Solar Turbines Incorporated, now a Caterpillar subsidiary, in 1980 as an associate engineer.

skills and qualifications

 

 

Business Leadership / Operations: Chairman and CEO of Fortune 100 company. More than three decades of experience in senior management and executive positions at Caterpillar, including responsibility for engineering, manufacturing, marketing, sales, and services.

Environmental Affairs: As Chairman and CEO of Caterpillar, oversees all aspects of Caterpillar’s environmental and sustainability policies and strategies, which include initiatives to address challenges like preventing waste, improving the quality and efficiency of operations, developing infrastructure, and ensuring access to energy, human health, and environmental safety. Served as a member of the Latin America Conservation Council, in partnership with The Nature Conservancy, a global conservation organization. Former director of the World Resources Institute, an international research nonprofit organization working to secure a sustainable future.

Finance: Chairman and CEO of Fortune 100 company. More than a decade of financial responsibility and experience at Caterpillar.

Global Business / International Affairs: Chairman and CEO of Fortune 100 company with extensive international operations. Served in assignments at Caterpillar in Singapore and Kuala Lumpur from 1984 to 1990. Director of the Peterson Institute for International Economics, the U.S.-China Business Council, and the U.S.-India Business Strategic Partnership Forum and a former member of the U.S.-India CEO Forum.

Science / Technology / Engineering: B.S. in Mechanical Engineering from the Rose-Hulman Institute of Technology. Has served in a variety of senior management and executive positions at Caterpillar, requiring expertise in engineering and technology.

 

16       Chevron Corporation—2021 Proxy Statement


Table of Contents
 

 

election of directors  

 

 

 

 

LOGO   

Michael K. Wirth

Chairman and Chief Executive Officer, Chevron Corporation

 

Age: 60

Director Since: February 2017

Independent: No

 

Chevron Committees:

 

•  None

 

Current Public Company Directorships:

 

•  None

 

 

Prior Public Company Directorships

(within last five years):

 

•  None

 

Other Directorships and Memberships:

 

•  American Heart Association CEO Roundtable

•  American Petroleum Institute

•  American Society of Corporate Executives

•  The Business Council

•  Business Roundtable

•  Catalyst

•  International Business Council of the World Economic Forum

•  National Petroleum Council

 

Mr. Wirth has been Chairman and Chief Executive Officer of Chevron since February 2018. He was Vice Chairman in 2017 and Executive Vice President of Midstream & Development from 2016 until 2018, where he was responsible for supply and trading, shipping, pipeline, and power operating units; corporate strategy; business development; and policy, government, and public affairs. He served as Executive Vice President of Downstream & Chemicals from 2006 to 2015. From 2003 until 2006, Mr. Wirth was President of Global Supply & Trading. Mr. Wirth joined Chevron in 1982.

skills and qualifications

 

 

Business Leadership / Operations: Chairman and CEO of Chevron. Twelve years as Executive Vice President of Chevron. More than three decades of experience in senior management and executive positions at Chevron.

Environmental Affairs: As Chairman and CEO of Chevron, oversees all aspects of Chevron’s environmental policies and strategies. Oversaw environmental policies and strategies of Chevron’s Downstream & Chemicals and shipping and pipeline operations.

Finance: CEO of Fortune 100 company. More than a decade of financial responsibility and experience at Chevron.

Global Business / International Affairs: Chairman and CEO of Fortune 100 company with extensive international operations. Served as President of Marketing for Chevron’s Asia/Middle East/Africa marketing business based in Singapore and served as director of Caltex Australia Ltd. and GS Caltex in South Korea.

Government / Regulatory / Public Policy: More than three decades of experience in highly regulated industry. As Chairman and CEO of Chevron, oversees all aspects of Chevron’s government, regulatory, and public policy affairs.

Science / Technology / Engineering: B.S. in Chemical Engineering from the University of Colorado. More than three decades of experience at Chevron. Joined as a design engineer and advanced through a number of engineering, construction, marketing, and operations roles.

vote required

Each Director nominee who receives a majority of the votes cast (i.e., the number of shares voted FOR a Director nominee must exceed the number of shares voted AGAINST that Director nominee, excluding abstentions) will be elected a Director in an uncontested election. Any shares not voted (whether by abstention or otherwise) will have no impact on the elections. If you are a street name stockholder and do not vote your shares, your bank, broker, or other holder of record cannot vote your shares at its discretion in these elections.

If the number of Director nominees exceeds the number of Directors to be elected—a circumstance we do not anticipate—the Directors shall be elected by a plurality of the shares present in person or by proxy at the Annual Meeting, or any adjournment or postponement thereof, and entitled to vote on the election of Directors.

your board’s recommendation

Your Board recommends that you vote FOR the 12 Director nominees named in this Proxy Statement.

 

Chevron Corporation—2021 Proxy Statement       17


Table of Contents

director compensation

overview

 

Our compensation for non-employee Directors is designed to be competitive with compensation for directors of other large, global energy companies and other large, capital-intensive, international companies; to link rewards to business results and stockholder returns; and to align stockholder and Director interests through increased Director ownership of Chevron common stock. We do not have a retirement plan for non-employee Directors. Our Chief Executive Officer is not paid additional compensation for service as a Director.

The Governance Committee evaluates and recommends to the non-employee Directors of the Board the compensation for non-employee Directors, and the non-employee Directors of the Board approve the compensation. Our executive officers have no role in determining the amount or form of non-employee Director compensation.

In 2020, the Governance Committee retained the services of an independent compensation consultant, Pearl Meyer & Partners, LLC (“Pearl Meyer”), to assist the Governance Committee with its periodic               

review of Chevron’s non-employee Director compensation program relative to Chevron’s 2020 Oil Industry Peer Group and 2020 Non-Oil Industry Peer Group (excluding Devon for the 2020 Oil Industry Peer Group and DuPont de Nemours for the 2020 Non-Oil Industry Peer Group), as identified in “use of peer groups” in the “compensation discussion and analysis” section of this Proxy Statement.

Based on this review, the Governance Committee recommended, and the non-employee Directors of the Board agreed, that no changes should be made to Director compensation in 2021.

Pearl Meyer and its lead consultant report directly to the Governance Committee under the terms of the engagement, but they may work cooperatively with management to develop analyses and proposals when requested to do so by the Governance Committee. Pearl Meyer does not provide any services to the Company.

 

 

non-employee director compensation

In 2020, each non-employee Director received annual compensation of $375,000, with 40 percent paid in cash (or stock options at the Director’s election) and 60 percent paid in restricted stock units (“RSUs”). An additional cash retainer, in the amounts described below, is paid to the Lead Director and each Committee Chair. Directors do not receive fees for attending Board or Board Committee meetings, nor do they receive fees for meeting with stockholders. Under the Chevron Corporation Non-Employee Directors’ Equity Compensation and Deferral Plan, as amended, and Plan Rules, as amended (together, the “NED Plan”), Chevron’s Annual Compensation Cycle for its non-employee Directors is the period commencing on the day of the Annual Meeting at which the Director is elected through the day immediately preceding the next Annual Meeting.

 

Position

 

 

Cash Retainer(1)

 

   

RSUs(2)  

 

Non-Employee Director

  $ 150,000     $225,000

Lead Director

  $ 30,000     –  

Audit Committee Chair

  $ 30,000     –  

Board Nominating and Governance Committee Chair

  $ 20,000     –  

Management Compensation Committee Chair

  $ 25,000     –  

Public Policy and Sustainability Committee Chair

  $ 20,000     –  

 

(1)

Each cash retainer is paid in monthly installments beginning with the date the Director is elected to the Board. Under the NED Plan, Directors can elect to receive nonstatutory/nonqualified stock options instead of any portion of their cash compensation. Directors can also elect to defer receipt of any portion of their cash compensation. Deferral elections must be made by December 31 in the year preceding the year in which the cash to be deferred is earned. Deferrals are credited, at the Director’s election, into accounts tracked with reference to the same investment fund options available to participants in the Chevron Deferred Compensation Plan, including a Chevron Common Stock Fund. Distribution of deferred amounts is in cash except for amounts valued with reference to the Chevron Common Stock Fund, which are distributed in shares of Chevron common stock.

 

(2)

RSUs are granted on the date of the Annual Meeting at which the Director is elected. If a Director is elected to the Board between annual meetings, a prorated grant is made. RSUs are paid out in shares of Chevron common stock unless the Director has elected to defer the payout until retirement. RSUs are subject to forfeiture (except when the Director dies, reaches mandatory retirement age of 74, becomes disabled, changes primary occupation, or enters government service) until the earlier of 12 months or the day preceding the first Annual Meeting following the date of the grant.

expenses and charitable matching gift program

 

Non-employee Directors are reimbursed for out-of-pocket expenses incurred in connection with the business and affairs of Chevron. Non-employee Directors are eligible to participate in Chevron Humankind, our charitable matching gift and community involvement program, which is available to any employee, retiree, or Director. For active employees         

and Directors, we match contributions to eligible entities and grants for volunteer time, up to a maximum of $10,000 per year.

 

 

18       Chevron Corporation—2021 Proxy Statement


Table of Contents
 

 

director compensation  

 

 

 

 

compensation during the fiscal year ended december 31, 2020

The following table sets forth the compensation of our non-employee Directors for the fiscal year ended December 31, 2020.

 

 

Name

 

 

 

Fees earned or
paid in cash

($)(1)

 

   

 

Stock
awards

($)(2)

 

   

 

Option
awards

($)(3)

 

   

 

All other
compensation

($)(4)

 

   

 

Total

($)

 

 

Wanda M. Austin

 

 

—      

 

 

$

    225,000

 

 

$

 170,000

(5) 

 

$

    10,654

 

 

$

    405,654

 

John B. Frank

 

$

93,750

(6)(7) 

 

$

225,000

 

 

$

37,500

 

 

$

10,654

 

 

$

366,904

 

Alice P. Gast

 

$

    150,000

(6) 

 

$

225,000

 

 

 

—      

 

$

654

 

 

$

375,654

 

Enrique Hernandez, Jr.

 

$

87,500

(5)(7)(8) 

 

$

225,000

 

 

 

—      

 

$

10,654

 

 

$

323,154

 

Marillyn A. Hewson(9)

 

 

—      

 

 

—      

 

 

—      

 

 

—      

 

 

—      

Jon M. Huntsman Jr.(10)

 

$

29,258

 

 

$

156,387

 

 

 

—      

 

$

179

 

 

$

185,824

 

Charles W. Moorman IV

 

$

45,000

(5)(6)(7) 

 

$

225,000

 

 

$

90,000

(5) 

 

$

10,654

 

 

$

370,654

 

Dambisa F. Moyo

 

$

150,000

 

 

$

225,000

 

 

 

—      

 

$

654

 

 

$

375,654

 

Debra Reed-Klages

 

$

150,000

(6) 

 

$

225,000

 

 

 

—      

 

$

654

 

 

$

375,654

 

Ronald D. Sugar

 

$

200,000

(5)(6)(11) 

 

$

225,000

 

 

 

—      

 

$

10,654

 

 

$

435,654

 

Inge G. Thulin

 

$

12,500

(12) 

 

 

—      

 

 

 

—      

 

 

—      

 

$

12,500

 

D. James Umpleby III

 

 

$

 

150,000

 

(6) 

 

 

$

 

225,000

 

 

 

 

 

 

—      

 

 

 

$

 

654

 

 

 

 

$

 

375,654

 

 

 

 

(1)

Form of compensation elected by a Director, as described above, can result in differences in reportable compensation.

 

(2)

Amounts reflect the aggregate grant date fair value for RSUs granted in 2020 under the NED Plan. We calculate the grant date fair value of these awards in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation—Stock Compensation (“ASC Topic 718”), for financial reporting purposes. The grant date fair value of these RSUs was $93.30 per unit, the closing price of Chevron common stock on May 26, 2020, except for the prorated award for Gov. Huntsman. For Gov. Huntsman, the grant date fair value of these RSUs was $76.35 per unit, the closing price of Chevron common stock on September 15, 2020, the day he joined the Board. Gov. Huntsman received a prorated grant of 2,048 RSUs for the compensation period covering September 15, 2020, through May 25, 2021. RSUs accrue dividend equivalents, the value of which is factored into the grant date fair value. For purposes of this table only, estimates of forfeitures related to service-based vesting conditions have been disregarded. RSUs are payable in Chevron common stock.

At December 31, 2020, the following Directors had the following number of shares subject to outstanding stock awards or deferrals:

 

Name

 

 

Restricted
stock(a)

 

   

Stock units(a)

 

   

RSUs(a)

 

   

Stock units from
Director’s
deferral of cash
retainer(b)

 

   

Total

 

 

Wanda M. Austin

    –           –           2,485       –           2,485  

John B. Frank

    –           –           7,906       –           7,906  

Alice P. Gast

    –           –           17,062       –           17,062  

Enrique Hernandez, Jr.

    –           –           19,586       1,369       20,955  

Marillyn A. Hewson

    –           –           –           –           –      

Jon M. Huntsman Jr.

    –           –           2,076       –           2,076  

Charles W. Moorman IV

    –           –           22,089       11,095       33,184  

Dambisa F. Moyo

    –           –           2,485       –           2,485  

Debra Reed-Klages

    –           –           5,564       1,099       6,663  

Ronald D. Sugar

    2,811       8,603       39,526       17,710       68,650  

Inge G. Thulin

    –           –           11,016       648       11,664  

D. James Umpleby III

 

   

 

–    

 

 

 

   

 

–    

 

 

 

   

 

2,485

 

 

 

   

 

–    

 

 

 

   

 

2,485

 

 

 

 

  (a)

Represents awards of restricted stock and dividends and stock units and dividend equivalents from 2005 through 2006, and awards of RSUs and dividend equivalents beginning in 2007, rounded to whole units. Awards of restricted stock are fully vested and are settled in shares of Chevron common stock upon retirement. Awards of stock units and RSUs are settled in shares of Chevron common stock in either one or 10 annual installments following the Director’s retirement, resignation, or death. The terms of awards of RSUs are described above.

 

  (b)

Represents deferred compensation and dividend equivalents, rounded to whole units. Distribution will be made in either one or 10 annual installments. Any deferred amounts unpaid at the time of a Director’s death are distributed to the Director’s beneficiary.

 

(3)

For Directors electing to receive stock options in lieu of all or a portion of the annual cash retainer, the stock options are granted on the date of the Annual Meeting at which the Director is elected, with 50 percent vested on November 27, 2020, and 50 percent vesting on May 25, 2021. The aggregate grant date fair value is being reported as compensation in 2020, the year of grant, notwithstanding the Annual Compensation Cycle covering the period from May 27, 2020, through May 25, 2021. The stock options are exercisable for that number of shares of Chevron common stock determined by dividing the amount of the cash retainer subject to the election by the Black-Scholes value of a stock option on the date of grant. Elections to receive stock options in lieu of any portion of cash compensation must be made by December 31 in the year preceding the year in which the stock options are granted. The stock options have an exercise price based on the closing price of Chevron common stock on the date of grant.

 

    

Amounts reported here reflect the aggregate grant date fair value for stock options granted on May 27, 2020. The grant date fair value was determined in accordance with ASC Topic 718 for financial reporting purposes. The grant date fair value of each option is calculated using the Black-Scholes model. Stock options granted on May 27, 2020, have an exercise

 

Chevron Corporation—2021 Proxy Statement       19


Table of Contents

 

  director compensation  

 

 

 

 

price of $93.90 and a grant date fair value of $14.12. The assumptions used in the Black-Scholes model to calculate this grant date fair value were: an expected life of 6.6 years, a volatility rate of 29.3 percent, a risk-free interest rate of 0.48 percent, and a dividend yield of 4.71 percent. For purposes of this table only, estimates of forfeitures related to service-based vesting conditions have been disregarded.

 

    

Dr. Austin and Messrs. Frank and Moorman each elected to receive all or a part of their 2020 annual cash compensation in the form of stock options. The number of stock options granted in 2020 was 12,039 to Dr. Austin, 2,655 to Mr. Frank, and 6,373 to Mr. Moorman. One-half of the stock options vested on November 27, 2020, and the remaining half vests on May 25, 2021. Stock options expire after 10 years.

 

    

At December 31, 2020, Dr. Austin had 23,471, Mr. Frank had 12,003, and Mr. Moorman had 28,809 outstanding, vested and unvested stock options. Under the NED Plan, Directors who retire in accordance with Chevron’s Director Retirement Policy have until 10 years from the date of grant to exercise any outstanding options.

 

(4)

All Other Compensation for 2020 includes the following items:

 

 

Name

 

 

 

Insurance(a)

 

 

 

Perquisites(b)

 

 

 

Charitable(c)

 

Wanda M. Austin

 

$    654

 

 

$    10,000

John B. Frank

 

$    654

 

 

$    10,000

Alice P. Gast

 

$    654

 

 

      –

Enrique Hernandez, Jr.

 

$    654

 

 

$    10,000

Marillyn A. Hewson

 

      –

 

 

      –

Jon M. Huntsman Jr.

 

$    179

 

 

      –

Charles W. Moorman IV

 

$    654

 

 

$    10,000

Dambisa F. Moyo

 

$    654

 

 

      –

Debra Reed-Klages

 

$    654

 

 

      –

Ronald D. Sugar

 

$    654

 

 

$    10,000

Inge G. Thulin

 

      –

 

 

      –

D. James Umpleby III

 

 

$    654

 

 

 

 

      –

 

 

  (a)

Amounts reflect the annualized premium for accidental death and dismemberment insurance coverage paid by Chevron.

 

  (b)

Perquisites and personal benefits did not equal or exceed $10,000 for any Director in 2020.

 

  (c)

Amounts reflect payments made to charitable organizations under Chevron Humankind, our charitable matching gift and community involvement program, to match donations made by the Directors in 2020.

 

(5)

Amount includes the additional retainer paid for serving as a Board Committee Chair during 2020.

 

(6)

Director has elected to defer all or a portion of the cash retainer under the NED Plan in 2020. None of the earnings under the NED Plan are above market or preferential.

 

(7)

Messrs. Frank, Hernandez, and Moorman each elected to receive all or a portion of his 2020 cash retainer covering the period from January 1, 2020, through May 26, 2020, in the 2019 Annual Compensation Cycle in stock options in lieu of cash. Accordingly, all or a portion of the cash retainer was reported as compensation in 2019.

 

(8)

Reflects Mr. Hernandez’s cash retainer covering the period from May 27, 2020, through December 31, 2020.

 

(9)

Ms. Hewson joined the Board on January 1, 2021; therefore, she received no compensation in 2020.

 

(10)

Gov. Huntsman joined the Board on September 15, 2020.

 

(11)

Amount includes the additional cash retainer paid for serving as Lead Director during 2020.

 

(12)

Mr. Thulin resigned from the Board effective January 1, 2020. Reflects Mr. Thulin’s cash retainer paid in January 2020 for his service as a Director for the period December 1, 2019, through December 31, 2019.

 

20       Chevron Corporation—2021 Proxy Statement


Table of Contents

 

corporate governance

overview

 

Chevron is governed by a Board of Directors and Board Committees that meet throughout the year. Directors discharge their responsibilities at Board and Committee meetings and through other communications with

management. Your Board is committed to strong corporate governance structures and practices that help Chevron compete more effectively, sustain its success, and build long-term stockholder value.

 

 

role of the board of directors

 

Your Board oversees and provides guidance for Chevron’s business and affairs. The Board oversees management’s development and implementation of Chevron’s strategy and business planning process. The Board monitors corporate performance, the integrity of Chevron’s financial controls, and the effectiveness of its legal compliance and enterprise risk management programs. This is generally a year-round         

process, culminating in Board reviews of Chevron’s strategic plan, its business plan, the next year’s capital expenditures budget, and key financial and operational indicators. Your Board also oversees management and the succession of key executives.

 

 

board leadership structure

 

Under Chevron’s By-Laws, the positions of Chairman of the Board and Chief Executive Officer are separate positions that may be occupied by the same person at the discretion of the Board. Chevron’s independent Directors select the Chairman of the Board annually. Thus, the Board has great flexibility to choose its optimal leadership structure depending upon Chevron’s particular needs and circumstances and to organize its functions and conduct its business in the most effective manner.

Annually, the Governance Committee conducts an assessment of Chevron’s corporate governance structures and processes, which includes a review of Chevron’s Board leadership structure and whether combining or separating the roles of Chairman and CEO is in the best interests of Chevron’s stockholders. At present, Chevron’s Board believes that it is in the stockholders’ best interests for the CEO, Michael K. Wirth, to also serve as Chairman of the Board. The Board believes that having Mr. Wirth serve as Chairman fosters an important unity of leadership between the Board and management that is subject to effective oversight by the independent Lead Director and the other independent Directors. The Board believes that it benefits from the significant knowledge, insight, and perspective of Chevron and the energy industry that Mr. Wirth has gained throughout his 38 years with Chevron. Our business is highly complex, and our projects often have long lead times, with many of our major capital projects taking more than 10 years from the exploration phase to first production. The Board believes that Mr. Wirth’s in-depth         

knowledge of the Company, coupled with his extensive industry expertise, makes him particularly qualified to lead discussions of the Board. Having Mr. Wirth serve as Chairman also promotes better alignment of Chevron’s long-term strategic development with its operational execution. Also, as a global energy company that negotiates concessions and leases with host-country governments around the world, it is advantageous to the Company for the CEO to represent the Chevron Board in such dialogues as its Chairman.

Significantly, the Board does not believe that combining the roles creates ambiguity about reporting relationships. Given the role of the independent Lead Director discussed below and the fact that the independent Directors, pursuant to their powers under the By-Laws, have affirmatively selected Mr. Wirth for the positions of Chairman and CEO, annually set his compensation, and regularly evaluate his performance, the Board believes it is clear that Mr. Wirth reports and is accountable to the independent Directors. Moreover, the Board does not believe that having the CEO also serve as Chairman inhibits the flow of information and interactions between the Board, management, and other Company personnel. To the contrary, the Board has unfettered access to management and other Company employees, and the Board believes that having Mr. Wirth in the roles of both Chairman and CEO facilitates the flow of information and communications between the Board and management, which enhances the Board’s ability to obtain information and to monitor management.

 

 

Chevron Corporation—2021 Proxy Statement       21


Table of Contents

 

  corporate governance  

 

 

 

independent lead director

 

Your Board recognizes the importance of independent Board oversight of the CEO and management and has developed policies and procedures designed to ensure independent oversight. In addition to conducting an annual review of the CEO’s performance, the independent Directors meet in executive session at each regular Board meeting and discuss management’s performance and routinely formulate guidance and feedback, which the independent Lead Director provides to the CEO and other members of management.

Further, when the Board selects the CEO to also serve as Chairman, the independent Directors annually select an independent Lead Director, currently Dr. Sugar. The Board routinely reviews the Lead Director’s responsibilities to ensure that these responsibilities enhance its independent oversight of the CEO and management and the flow of information and interactions between the Board, management, and other Company personnel. Annually the Lead Director leads the independent Directors’ review of candidates for all senior management positions. This succession planning process includes consideration of both ordinary course succession, in the event of planned promotions and retirements, and planning for situations where the CEO or another member of senior management unexpectedly becomes unable to perform the duties of their positions.

The Lead Director and Chairman collaborate closely on Board meeting schedules and agendas and information provided to the Board. These consultations and agendas and the information provided to the Board frequently reflect input and suggestions from other members of the Board and management. You can read more about these particular processes in the “Board Agenda and Meetings” section of Chevron’s Corporate Governance Guidelines.

Any stockholder can communicate with the Lead Director or any of the other Directors in the manner described in the “Communicating with the Board” section of this Proxy Statement.

Also, as discussed in more detail in the “Environmental, Social, and Governance Engagement” section of this Proxy Statement, the Board encourages a robust investor engagement program. During these engagements, Board leadership is a frequent topic of discussion. In general, investors, including those who are philosophically opposed to         

combining the positions of Chairman and CEO, have overwhelmingly communicated to Chevron that they have minimal, if any, concerns about your Board or individual Directors or about Chevron’s policies and leadership structure. More specifically, these investors have voiced confidence in the strong counterbalancing structure of the robust independent Lead Director role.

 

 

 

 

As described in the “Board Leadership and Lead Director” section of Chevron’s Corporate Governance Guidelines, the Lead Director’s responsibilities are to:

 

•  chair all meetings of the Board in the Chairman’s absence;

 

•  chair the executive sessions;

 

•  lead non-management Directors in an annual discussion of the performance evaluation of the CEO as well as communicate that evaluation to the CEO;

 

•  oversee the process for CEO succession planning;

 

•  lead the Board’s review of the Governance Committee’s assessment and recommendations from the Board self-evaluation process;

 

•  lead the individual Director evaluation process;

 

•  serve as liaison between the Chairman and the independent Directors;

 

•  consult with the Chairman on and approve agendas and schedules for Board meetings and other matters pertinent to the Corporation and the Board;

 

•  be available to advise the Committee Chairs of the Board in fulfilling their designated roles and responsibilities;

 

•  participate in the interview process for prospective directors with the Governance Committee;

 

•  call meetings of the independent Directors and special meetings of the Board; and

 

•  be available as appropriate for consultation and direct communication with major stockholders.

 

 
 

 

22       Chevron Corporation—2021 Proxy Statement


Table of Contents
 

 

corporate governance  

 

 

 

 

human capital management

 

Chevron sits at the epicenter of the future of energy. In an ever-changing energy landscape, human capital management is essential to ensuring we can build a better tomorrow. Our approach is linked to the future of energy with a focus on higher returns and lower carbon. We believe human ingenuity fuels innovation and that the imagination and perseverance of people will deliver solutions to energy’s greatest challenges.

Our key human capital management objectives are focused on investing in our people and our culture. We hire, develop, and strive to retain critical talent, and foster a culture that values diversity and inclusion and employee engagement, all of which support our overall objective to deliver industry-leading performance. Our leadership reinforces and monitors our investment in people and our culture to ensure we foster a workplace that enables the ingenuity of our employees to solve any challenge and overcome any obstacle.

 

 

Hiring, Development, and Retention

 

Our approach to attracting, developing, and retaining our employees is anchored in a career-oriented employment model to build a workforce prepared to meet the energy needs of the future. We recruit new employees through partnerships with universities and diversity associations. In 2020, more than 500 students participated in our first-ever virtual internship program. In addition, we recruit experienced hires to target critical skills. Our talent acquisition efforts ensure we attract the next generation of problem solvers.

Development programs are designed to build leadership capabilities at all levels and ensure our workforce has the technical and operating capabilities to produce energy safely and reliably. Our leadership regularly reviews metrics on employee training and development programs, which are continually evolving to better meet the needs of the business. For instance, we recently launched learning initiatives focused on digital innovation, including new Digital Academy and Digital Scholars programs. In addition, to ensure business continuity, management regularly reviews the talent pipeline, identifies, and develops succession candidates, and builds succession plans for leadership positions. The         

Board is actively involved in reviewing and approving executive compensation, personnel selections, and succession plans to ensure we have leadership in place with the requisite skills and experience. In addition to the annual review of the CEO led by the Lead Director, the CEO periodically provides the Board with an assessment of senior executives and their potential as successors for the CEO position, as well as perspectives on potential candidates for other senior management positions. Members of the Board also meet directly with potential candidates for senior management positions. Our development programs and succession planning practices prepare us to continue providing the energy that enables human progress around the world.

Our 2020 annual voluntary attrition was 4.1 percent, in line with our historical rates. The voluntary attrition rate generally excludes employee departures under enterprise-wide restructuring programs. We believe our low voluntary attrition rate is in part a result of our commitment to employee development and career advancement.

 

 

Chevron Corporation—2021 Proxy Statement       23


Table of Contents

 

  corporate governance  

 

 

 

Diversity and Inclusion

We are committed to advancing diversity and inclusion in the workplace so that employees are enabled to contribute to their full potential. We believe innovative solutions to our most complex challenges emerge when diverse people, ideas, and experiences come together in an inclusive environment. We reinforce the value of diversity and inclusion through accountability, communication, training, and personnel selection processes. Examples of initiatives to further advance diversity and inclusion include our Neurodiversity program through which we employ neurodiverse individuals and leverage their talents, our Elevate program, which focuses on learning opportunities to promote a deeper understanding of employees in underrepresented groups, and our Returnship initiative, which provides support for women re-entering the workforce. In addition, we have 12 employee networks (voluntary groups of employees that come together based on shared identity or interests) and more than 15 diversity councils across our business units that help align diversity and inclusion efforts with business strategies. Through these programs, and others, we foster a culture that values the uniqueness and diversity of individual talents, experiences, and ideas.

 

 

LOGO

Employee Engagement

 

Employee engagement is an indicator of employee well-being and commitment to our values, purpose, and strategies. We conduct annual employee surveys to assess the health of our culture. Recent surveys have indicated a high degree of employee engagement. In 2020, our employee survey focused on the COVID-19 impact on employee well-being and our response to the pandemic. The survey results positively reinforced actions taken by Chevron, and helped inform further actions to address the impact on employees and their families through enhanced mental health and wellness support and financial assistance for unplanned childcare needs and remote learning resources, among other     

efforts. We also have long-standing programs such as Ombuds, an independent resource designed to equip employees with options to address and resolve workplace issues; a Company hotline, where employees can report concerns to the Corporate Compliance department; and our Employee Assistance Program, a confidential consulting service that can help employees resolve a broad range of personal, family, and work-related concerns or problems.

 

 

24       Chevron Corporation—2021 Proxy Statement


Table of Contents
 

 

  corporate governance  

 

 

board oversight of strategy

 

The Board of Directors and the Board Committees provide guidance to and oversight of management with respect to Chevron’s business strategy throughout the year. The Board dedicates at least one meeting each year to focus on Chevron’s strategic planning. In two of the past three years, the Board participated in expanded offsite strategy sessions that included presentations by third-party experts to discuss energy transition issues. In 2020, the Board held two special meetings to discuss strategic matters, resulting in the acquisition of Noble Energy, Inc. In addition, various elements of strategy are discussed at every Board meeting, as well as at many meetings of the Board’s Committees. The Board also dedicates one meeting each year to review

Chevron’s five-year business plan and to endorse the business plan, performance objectives, and capital and exploratory budget for the coming year. Our strategic plan sets direction, aligns our organization, and differentiates us from the competition. It guides our actions to successfully manage risk and deliver stockholder value. The Board of Directors and the Board Committees oversee fundamental components of our strategic plan, and management is charged with executing the business strategy. In order to assess performance against our strategic plans, the Board receives regular updates on progress and execution and provides guidance and direction throughout the year.

 

 

board oversight of risk

The Board of Directors and the Board Committees oversee Chevron’s risk management policies, processes, and practices for the risk management systems throughout the Company. Chevron faces a broad array of risks, including without limitation market, operational, strategic, legal, regulatory, political, financial, cybersecurity, sustainability, and climate change risks. The Board exercises its role of risk oversight in a variety of ways, including the following:

 

 

Board of Directors

 

 

•  Monitors overall corporate performance, the integrity of financial and other controls, and the effectiveness of the Company’s legal compliance and enterprise risk management programs, risk governance practices, and risk mitigation efforts, particularly with regard to those risks specified by the Company as “Risk Factors” in its Annual Report on Form 10-K

 

•  Oversees management’s implementation and utilization of appropriate risk management systems at all levels of the Company, including operating companies, business units, corporate departments, and service companies

 

•  Reviews specific facilities and operational risks as part of visits to Company operations

 

•  Reviews portfolio, capital allocation, and geopolitical risks in the context of the Board’s annual strategy session and the annual business plan and capital budget review and approval process

 

•  Receives reports from management on and considers risk matters in the context of the Company’s strategic, business, and operational planning and decision making

 

•  Receives reports from management on, and routinely considers, critical risk topics such as operational, financial, geopolitical/legislative, strategic, geological, security, commodity trading, skilled personnel/human capital, capital project execution, civil unrest, legal, technology/cybersecurity risk, and climate change risks

 

 

 

 

Audit Committee  

•  Assists the Board in fulfilling its oversight of accounting and financial reporting processes, including the audits and integrity of the Corporation’s financial statements, financial risk exposures as part of Chevron’s broad enterprise management program, the qualifications, performance and independence of the independent auditor, the effectiveness of internal controls over financial reporting, and the implementation and effectiveness of Chevron’s compliance programs and Internal Audit function

 

•  Meets with and reviews reports from Chevron’s independent registered public accounting firm and internal auditors

 

•  Discusses Chevron’s policies with respect to financial risk assessment and financial risk management including, but not limited to, cybersecurity and sustainability and climate change risks

 

•  Meets with Chevron’s Chief Compliance Officer and certain members of Chevron’s Compliance Policy Committee to receive information regarding compliance policies and procedures and internal controls

 

•  Meets with Chevron’s Chief Information Officer to review cybersecurity implications and risk management on financial exposures

 

•  Reports its discussions to the full Board for consideration and action when appropriate

 

 

 

 

Chevron Corporation—2021 Proxy Statement       25


Table of Contents

 

corporate governance  

 

 

 

 

Board Nominating and Governance Committee

 

 

•  Assists the Board in fulfilling its oversight of risks that may arise in connection with Chevron’s governance practices and processes

 

•  Conducts an annual evaluation of Chevron’s governance practices with the help of the Corporate Governance Department

 

•  Discusses risk management in the context of general governance matters, including topics such as Board succession planning to ensure desired skills and attributes are represented, including but not limited to diversity, business leadership, finance, policy, and environmental and climate change experience; Board and individual Director assessment; delegations of authority and internal approval processes; stockholder proposals and activism; and Director and officer liability insurance

 

•  In conjunction with the Public Policy and Sustainability Committee, oversees Chevron’s stockholder engagement program and makes recommendations regarding stockholder engagement

 

•  Reports its discussions to the full Board for consideration and action when appropriate

 

 

 

 

 

Management

Compensation

Committee

 

•  Assists the Board in fulfilling its oversight of risks that may arise in connection with Chevron’s compensation programs and practices

 

•  Reviews the design and goals of Chevron’s compensation programs and practices in the context of possible risks to Chevron’s financial and reputational well-being, and alignment with stockholders’ interests, including those related to sustainability and climate change risks and opportunities.

 

•  Reviews Chevron’s strategies and supporting processes for executive retention and diversity

 

•  Reports its discussions to the full Board for consideration and action when appropriate

 

 

 

 

 

Public Policy

and Sustainability Committee

 

•  Assists the Board in fulfilling its oversight of risks that may arise in connection with the social, political, environmental, human rights, and public policy aspects of Chevron’s business and the communities in which it operates

 

•  Provides oversight and guidance on and receives reports regarding environmental matters, including those related to sustainability and climate change, in connection with Chevron’s projects and operations

 

•  Discusses risk management in the context of, among other things, legislative and regulatory initiatives (including political activities such as political contributions and lobbying), safety and environmental stewardship, community relations, government and nongovernmental organization relations, and Chevron’s global reputation

 

•  In conjunction with the Governance Committee, oversees Chevron’s stockholder engagement program and makes recommendations regarding stockholder engagement

 

•  Reports its discussions to the full Board for consideration and action when appropriate

 

 

 

 

26       Chevron Corporation—2021 Proxy Statement


Table of Contents
 

 

  corporate governance  

 

 

board oversight of sustainability

 

Chevron’s sustainability efforts and environmental, social, and governance (“ESG”) priorities are focused on protecting the environment, empowering people, and getting results the right way. The Board oversees Chevron’s performance and management of various ESG issues, including climate change, ESG reporting, lobbying practices, human capital management, cybersecurity, and human rights. The Board also offers guidance on Chevron’s Corporate Sustainability Report and on climate change reports aligned with the Financial Stability Board’s Task Force on Climate-related Financial Disclosures (“TCFD”). The Board’s four standing committees provide oversight and guidance over different aspects of ESG issues. For example, the Public Policy and Sustainability Committee assesses and advises on risks that may arise in connection with social, political, environmental, and public policy aspects of Chevron’s business and helps management evaluate trends and potential   

implications. The Public Policy and Sustainability Committee is briefed on the work of the Chevron Global Issues Committee, an executive-level committee that is regularly updated on various sustainability issues as well as ESG engagements with stockholders and other stakeholders. The Audit Committee discusses potential financial risk exposures related to sustainability. The Governance Committee discusses maintaining appropriate Board composition to oversee various sustainability and ESG issues and reviews stockholder proposals, many of which are ESG focused. The Management Compensation Committee (“MCC”) discusses how to align incentive program design with Chevron’s sustainability strategy. In addition to providing oversight, the Board is committed to fostering long-term and institutionwide relationships with stockholders and listening to their input on sustainability and ESG issues.

 

 

board oversight of environmental issues

 

Chevron operates using four environmental principles that define how we develop energy in an environmentally responsible manner: include environmental impact in decision making, reduce our environmental footprint, operate responsibly, and steward our sites. A description of these principles can be found at www.chevron.com/corporate-responsibility/environment. The Board of Directors, and the Public Policy and Sustainability Committee in particular, provide oversight and guidance on environmental matters in connection with Chevron’s projects and operations and are regularly briefed by professionals whose focus is on environmental protection and stewardship. Members of the Board regularly visit Chevron operations across the globe and discuss environmental matters specific and relevant to these locations. Significant   

environmental and process safety issues are reviewed by the Board to ensure compliance with the Company’s rigorous processes. The Public Policy and Sustainability Committee assists the Board in identifying, evaluating, and monitoring public policy trends and environmental issues that could impact the Company’s business activities and performance. It also reviews and makes recommendations for Chevron’s strategies related to corporate responsibility and reputation management. The Board of Directors and the Public Policy and Sustainability Committee regularly receive reports of stockholder engagements related to environmental issues and incorporate these into the direction they provide to management.

 

 

Chevron Corporation—2021 Proxy Statement       27


Table of Contents

 

corporate governance  

 

 

 

director independence

 

 

Your Board has determined that each non-employee Director who served in 2020 and non-employee Director nominee is independent in accordance with the NYSE Corporate Governance Standards and that no material relationship exists with Chevron other than as a Director.

 

 

For a Director to be considered independent, the Board must determine that the Director does not have any material relationship with Chevron, other than as a Director. In making its determinations, the Board adheres to the specific tests for independence included in the NYSE Corporate Governance Standards. In addition, the Board has determined that the following relationships of Chevron Directors occurring within the last fiscal year are categorically immaterial to a determination of independence if the relevant transaction was conducted in the ordinary course of business:

 

 

a director of another entity if business transactions between Chevron and that entity do not exceed $5 million or 5 percent of the receiving entity’s consolidated gross revenues, whichever is greater;

 

 

a director of another entity if Chevron’s discretionary charitable contributions to that entity do not exceed $1 million or 2 percent of that entity’s gross revenues, whichever is greater, and if the charitable contributions are consistent with Chevron’s philanthropic practices; and

 

 

a relationship arising solely from a Director’s ownership of an equity or limited partnership interest in a party that engages in a transaction with Chevron as long as the Director’s ownership interest does not exceed 2 percent of the total equity or partnership interest in that other party.

These categorical standards are contained in our Corporate Governance Guidelines, which are available on our website at www.chevron.com/investors/corporate-governance and are available in print upon request.

Drs. Moyo and Sugar, Ms. Hewson and Ms. Reed-Klages, and Messrs. Hernandez, Huntsman, Moorman, and Umpleby are directors of for-profit entities with which Chevron conducts business in the ordinary course. Other than Dr. Moyo, they and Drs. Austin and Gast, and Mr. Frank are also directors or trustees of, or similar advisors to, not-for-profit entities to which Chevron makes contributions. The Board has determined that all of these transactions and contributions were below the thresholds set forth in the first and second categorical standards described above (except as     

noted below) and are, therefore, categorically immaterial to the particular Director’s independence.

The Board reviewed the following relationships and transactions that existed or occurred in 2020 that are not covered by the categorical standards described above:

 

 

For Dr. Gast, the Board considered that, in 2020, Chevron made payments to Imperial College London amounting to less than 0.006 percent of Imperial College’s most recently reported annual gross revenues. Dr. Gast is the President of Imperial College London. The Board concluded that these transactions would not impair Dr. Gast’s independence.

 

 

For Mr. Hernandez, the Board considered that, in 2020, Chevron purchased services from two subsidiaries of Inter-Con Security Systems, Inc., in the ordinary course of business, amounting to less than 1 percent of Inter-Con’s most recent annual consolidated gross revenues. Mr. Hernandez is Chairman and Chief Executive Officer and a significant stockholder of Inter-Con, a privately held business. Mr. Hernandez’s adult son is President of Inter-Con. The Board concluded that these transactions would not impair Mr. Hernandez’s independence.

 

 

For Mr. Hernandez and Ms. Hewson, the Board considered that, in 2020, Chevron made contributions to Catalyst Inc., in the ordinary course of business, amounting to less than 6 percent of Catalyst’s most recently reported annual consolidated gross revenues. They are directors of Catalyst, a 501(c)(3) nonprofit organization, and Ms. Hewson is Chairman of the Board of Catalyst. The Board concluded that these transactions would not impair their independence.

 

 

For Mr. Umpleby, the Board considered that, in 2020, Chevron purchased products and services from Caterpillar Inc., in the ordinary course of business, amounting to less than 0.198 percent of Caterpillar’s most recently reported annual consolidated gross revenues, and Caterpillar purchased products and services from Chevron, in the ordinary course of business, amounting to less than 0.023 percent of Chevron’s most recently reported annual consolidated gross revenues. Mr. Umpleby is the Chairman and Chief Executive Officer of Caterpillar Inc. The Board concluded that these transactions would not impair Mr. Umpleby’s independence.

 

 

28       Chevron Corporation—2021 Proxy Statement


Table of Contents
 

 

  corporate governance  

 

 

board committees

 

Chevron’s Board of Directors has four standing Committees: Audit; Board Nominating and Governance; Management Compensation; and Public Policy and Sustainability. The Audit, Board Nominating and Governance, and Management Compensation Committees are each constituted and operated according to the independence and other requirements of the Securities Exchange Act of 1934, as amended (“Exchange Act”) and the NYSE Corporate Governance Standards. Each independent Director, including each member of the MCC, is an “outside” Director for purposes of ensuring that certain pre-2019 grants meet the grandfather rule in Section 162(m) of the Internal Revenue Code of 1986, as amended. In addition, each member of the Audit Committee is financially literate and an “audit committee financial expert,” as such terms are defined under the Exchange Act and related rules and the NYSE Corporate Governance Standards.

Each Committee is chaired by an independent Director who determines the agenda, the frequency, and the length of the meetings and who has     

unlimited access to management, information, and outside advisors, as necessary. Each non-employee Director generally serves on one or two Committees. Committee members serve staggered terms, enabling Directors to rotate periodically to different Committees. Four- to six-year terms for Committee Chairs facilitate rotation of Committee Chairs while preserving experienced leadership.

Each Committee operates under a written charter that sets forth the purposes and responsibilities of the Committee as well as qualifications for Committee membership. Each Committee assesses the adequacy of its charter periodically and recommends changes to the Governance Committee. All Committees report regularly to the full Board of Directors with respect to their activities. Committee charters can be viewed on Chevron’s website at www.chevron.com/investors/corporate-governance.

 

 

board and committee meetings and attendance

 

In 2020, your Board held six regular Board meetings and two special Board meetings, with each regular meeting including an executive session of independent Directors led by our independent Lead Director. In addition, 23 Board Committee meetings were held in 2020, which included nine Audit Committee, five Governance Committee, four MCC, three Public Policy and Sustainability Committee and two joint meetings of the Governance and the Public Policy and Sustainability Committees. All incumbent Directors attended 100 percent of their Board and                    

Committee meetings during 2020. Chevron’s policy regarding Directors’ attendance at the Annual Meeting, as described in the “Board Agenda and Meetings” section of Chevron’s Corporate Governance Guidelines (available at www.chevron.com/investors/corporate-governance), is that all Directors are expected to attend the Annual Meeting, absent extenuating circumstances. All Directors serving on the Board at the time attended the 2020 Annual Meeting.

 

 

board and committee evaluations

 

Each year, your Board and its Committees perform a rigorous self-evaluation. As required by Chevron’s Corporate Governance Guidelines, the Governance Committee oversees this process. The performance evaluations solicit anonymous input from Directors regarding the performance and effectiveness of the Board, the Board Committees, and individual Directors and provide an opportunity for Directors to identify areas for improvement. In addition, the independent Lead Director has individual conversations with each member of the Board, providing further opportunity for dialogue and improvement. In 2018, the Governance Committee augmented the individual Director evaluation by adding an individual Director performance evaluation questionnaire to more rigorously evaluate individual Director performance. Under this part of the process, each Director sends a confidential individual Director performance evaluation for each independent Director to outside counsel

retained by the Company at the Governance Committee’s request. Outside counsel compiles the results of the evaluations into reports, which are sent to the Lead Director for consideration and used by the Lead Director during individual conversations with each independent Director (the Chair of the Audit Committee receives the report on the Lead Director and meets with the Lead Director regarding that report). The Governance Committee reviews the results and feedback from the evaluation process and makes recommendations for improvements as appropriate. The independent Lead Director leads a discussion of the evaluation results during an executive session of the Board and communicates relevant feedback to the CEO. Your Board has successfully used this process to evaluate Board, Committee, and individual Director effectiveness, and identify opportunities to strengthen the Board.

 

 

Chevron Corporation—2021 Proxy Statement       29


Table of Contents

 

corporate governance  

 

 

 

     

Committees and membership

 

Committee functions

    

 

Audit

Charles W. Moorman IV, Chair*

John B. Frank

Marillyn A. Hewson

Dambisa F. Moyo

Debra Reed-Klages*

 

 

•  Selects the independent registered public accounting firm for endorsement by the Board and ratification by the stockholders

 

•  Reviews reports of the independent registered public accounting firm and internal auditors

 

•  Reviews and approves the scope and cost of all services (including non-audit services) provided by the independent registered public accounting firm

 

•  Monitors the effectiveness of the audit process and financial reporting

 

•  Monitors the maintenance of an effective internal audit function

 

•  Reviews the adequacy of accounting, internal control, auditing, and financial reporting matters

 

•  Monitors implementation and effectiveness of Chevron’s compliance policies and procedures

 

•  Assists the Board in fulfilling its oversight of enterprise risk management, particularly financial risks, including, but not limited to, cybersecurity and sustainability and climate change risks as they relate to financial risk exposures

 

•  Evaluates the effectiveness of the Audit Committee

 

   

 

Board Nominating

and Governance

Ronald D. Sugar, Chair

Wanda M. Austin*

Alice P. Gast

D. James Umpleby III

 

 

•  Evaluates the effectiveness of the Board and its Committees and recommends changes to improve Board, Board Committee, and individual Director effectiveness

 

•  Assesses the size and composition of the Board to evaluate the skills and experience that are currently represented, as well as the skills and characteristics that the Board may find valuable in the future, including but not limited to diversity, business leadership, finance, policy, and environmental and climate change experience

 

•  Engages in succession planning for the Board and key leadership roles on the Board and its Committees

 

•  Recommends prospective Director nominees

 

•  Oversees the orientation process for new Directors and ongoing education for Directors

 

•  Reviews and approves non-employee Director compensation

 

•  Evaluates and recommends changes as appropriate in Chevron’s Corporate Governance Guidelines, Restated Certificate of Incorporation, By-Laws, and other Board-adopted governance provisions

 

•  Assesses stock ownership guidelines for Directors and the Directors’ ownership relative to the guidelines

 

•  Reviews stockholder proposals and recommends (in conjunction with the Public Policy and Sustainability Committee) Board responses to proposals

 

•  Assists the Board in fulfilling its oversight of enterprise risk management, particularly risks in connection with Chevron’s corporate governance practices and processes

 

•  Evaluates the effectiveness of the Governance Committee

 

   

 

Management

Compensation

Enrique Hernandez, Jr., Chair*

Jon M. Huntsman Jr.

Ronald D. Sugar

D. James Umpleby III*

 

 

•  Conducts an annual review of the CEO’s performance

 

•  Reviews and recommends to the independent Directors salary and the short-term and long-term incentive compensation for the CEO

 

•  Reviews and approves salaries and short-term and long-term incentive compensation for executive officers other than the CEO

 

•  Reviews the annual Compensation Discussion and Analysis (“CD&A”) and recommends to the independent Directors to include in the Proxy Statement.

 

•  Administers Chevron’s executive incentive and equity-based compensation plans

 

•  Reviews Chevron’s strategies and supporting processes for executive retention and diversity

 

•  Reviews and approves executive compensation philosophy that aligns with Chevron’s strategy and stockholder interests, including those related to sustainability and climate change risks and opportunities

 

•  Reviews and approves peer group(s) used to benchmark executive compensation levels, program design and practices, and relative performance

 

•  Assists the Board in fulfilling its oversight of enterprise risk management, particularly risks in connection with Chevron’s compensation programs

•  Evaluates the effectiveness of the MCC

 

   

 

Public Policy and Sustainability

Wanda M. Austin, Chair*

Alice P. Gast

Enrique Hernandez, Jr.*

Jon M. Huntsman Jr.

 

 

•  Identifies, monitors, and evaluates domestic and international environmental, social, human rights, political, and public policy matters, including those related to sustainability and climate change, that are relevant to Chevron’s activities and performance

 

•  Assists the Board in devoting appropriate attention and effective response to stockholder concerns regarding such issues

 

•  Recommends to the Board policies, programs, and practices concerning support of charitable, political, and educational organizations

 

•  Reviews annually the policies, procedures, expenditures, and public disclosure practices related to Chevron’s political activities, including political contributions and direct and indirect lobbying

 

•  Reviews stockholder proposals and recommends (in conjunction with the Governance Committee) Board responses to proposals

 

•  Assists the Board in fulfilling its oversight of enterprise risk management, particularly risks in connection with the environmental, social, human rights, political, and public policy aspects of Chevron’s activities, and in doing so direct that the Company consider a broad range of perspectives

 

•  Evaluates the effectiveness of the Public Policy and Sustainability Committee

   

 

*

Effective May 26, 2021, Ms. Reed-Klages will be the Chair of the Audit Committee; Ms. Austin will be the Chair of the Governance Committee, rotate off of the Public Policy and Sustainability Committee, and join the MCC; Mr. Moorman will be the Chair of the MCC, rotate off of the Audit Committee and join the Governance Committee; Mr. Hernandez will be the Chair of the Public Policy and Sustainability Committee; and Mr. Umpleby will rotate off of the MCC and join the Public Policy and Sustainability Committee.

 

30       Chevron Corporation—2021 Proxy Statement


Table of Contents
 

 

  corporate governance  

 

 

corporate governance guidelines

Your Board has adopted Corporate Governance Guidelines to provide a transparent framework for the effective governance of Chevron. The Corporate Governance Guidelines are reviewed regularly and updated as appropriate. The full text of the Corporate Governance Guidelines can be found on our website at www.chevron.com/investors/corporate-governance. The guidelines address, among other topics:

 

 

the role of the Board

 

 

Board succession planning and membership criteria

 

 

Director independence

 

 

Board size

 

 

Director terms of office

 

 

the election of Directors

 

 

other Board memberships

 

 

Director retirement policy

 

 

number and composition of Board Committees

 

 

Board leadership and Lead Director

 

 

executive sessions

 

Business Conduct and Ethics Code

 

 

confidentiality

 

 

succession planning

 

 

Board compensation

 

 

Board access to management and other employees

 

 

Director orientation and education

 

 

evaluation of Board performance

 

 

Chief Executive Officer performance review

 

 

Director and officer stock ownership guidelines

 

 

access to outside advisors

 

 

Board agenda and meetings

 

 

business conduct and ethics code

We have adopted a code of business conduct and ethics for Directors, officers (including the Company’s Chief Executive Officer, Chief Financial Officer, and Controller), and employees, known as the Business Conduct and Ethics Code, which is available on our website at www.chevron.com and is available in print upon request. We will post any amendments to the code on our website. Directors, officers, and employees certify biennially that they will comply with the code.

hedging, pledging, and other transactions

Members of the Board and members of Chevron’s Global Leadership Forum are prohibited from:

 

 

engaging in hedging transactions or speculative transactions involving Chevron securities, including, but not limited to, short sales and trading in options, puts, calls, straddles, swaps, or other derivative securities;

 

 

purchasing Chevron securities on margin;

 

engaging in monetization transactions, such as forward sale contracts involving Chevron securities; and

 

 

pledging Chevron securities as collateral for a loan or any other purpose.

 

 

Employees, other than those listed above, are generally permitted to engage in transactions involving Chevron securities that are designed to hedge or offset market risk.

 

Chevron Corporation—2021 Proxy Statement       31


Table of Contents

 

corporate governance  

 

 

 

environmental, social, and governance engagement

 

 

 

Your Board believes that fostering long-term and institutionwide relationships with stockholders and other stakeholders and maintaining their trust and goodwill is a core Chevron objective. Chevron conducts extensive engagements with stockholders as an essential part of our commitment to sustainability. These engagements routinely cover governance, compensation, social, safety, environmental, climate change, culture, human rights, human capital management, and other current and emerging issues.

 

In addition, we have an extensive investor relations outreach effort, in which members of senior management routinely meet with major investors to review Company strategies, financial and operating performance, capital allocation priorities, and near-term outlook. We use all of these sessions to ensure that the Board and management understand and address the issues that are important to our stockholders.

 

 

  

In order to continuously improve Chevron’s governance processes and communications, Chevron follows an Annual Engagement Plan and Process. Through this program, we are able to identify and address environmental, social, and governance topics that are raised by our stockholders. The Governance Committee and the Public Policy and Sustainability Committee oversee the stockholder engagement program and make recommendations regarding stockholder engagement.

Since Chevron’s last Annual Meeting, an engagement team consisting of senior executives, subject matter experts on governance, compensation, and environmental and social issues (“ESG Engagement Team”), and, when appropriate, our independent Lead Director and our Public Policy      

and Sustainability Committee Chair have continued to lead our robust stockholder outreach program.

 

 

The ESG Engagement Team had 84 substantive engagements with stockholders representing more than 38 percent of Chevron’s outstanding common stock. Our Chairman and Board members attended several of these meetings.

 

 

In addition, the team reached out to every stockholder or their representative who submitted proposals for inclusion in our Proxy Statement and met with each one to discuss their concerns and areas of agreement and disagreement.

During our engagements, Chevron gained valuable feedback on several topics, including:

 

 

our response to the COVID-19 crisis;

 

 

our approach to the energy transition, greenhouse gas (“GHG”) metrics, and climate change lobbying;

 

 

the increased focus on diversity and inclusion;

 

 

expectations about executive compensation and alignment with performance; and

 

 

governance trends, such as growing demands for transparency and increasing scrutiny of company cultures.

This feedback was shared with the Board and its relevant Committees. For more information about these engagements, see the “Independent Lead Director,” and “Compensation Discussion and Analysis” sections of this Proxy Statement.

 

 

our response to stockholders

 

As noted above, Chevron engages regularly with key stockholders and has a robust process to systemically plan engagements and proactively address issues of importance to stockholders. In response to 2020 vote results and engagement feedback on several topics, Chevron worked to continue to enhance our performance and meet the expectations of our stockholders.

For example, on the issue of climate change lobbying, 54 percent of votes cast supported a 2020 stockholder proposal requesting for a report on if and how Chevron’s lobbying activities aligned with the Paris Agreement. After extensive engagement with stockholders to understand what further disclosure would be most helpful, and with oversight by the Public Policy and Sustainability Committee of the Board, in December 2020, Chevron published a special report on climate lobbying that describes (1) our energy transition strategy and policy framework; (2) how the Board and management provide oversight on climate lobbying; (3) our direct climate lobbying and trade associations process; and (4) how our key trade associations contribute to and advance the dialogue regarding the energy transition. We believe that our analysis shows that our                         

memberships help advance, to varying degrees, Chevron’s view on the energy transition. We value continued feedback on the report and appreciate investors’ general guidance that they are not promoting Chevron exit from specific trade associations.

In 2020, Chevron also received a stockholder proposal that 46 percent of votes cast supported, requesting a report about physical climate risks associated with expanding petrochemical operations. Chevron operates petrochemical operations through a joint-venture company, Chevron Phillips Chemical (“CPChem”). As part owner of the company, we encouraged CPChem to include more information about their approach to physical climate risks, which they reflected in their November 2020 sustainability report.

Several stockholders have suggested Chevron amend our Board Committee charters to clarify the scope and roles of our Board Committees. In January 2021, the Board amended the Audit Committee Charter to clarify that the Audit Committee is exercising oversight of the Company’s sustainability and climate change risks as they relate to

 

 

32       Chevron Corporation—2021 Proxy Statement


Table of Contents
 

 

  corporate governance  

 

 

financial risk exposures; amended the Governance Committee Charter to add a reference to the Corporate Governance Guidelines to clarify the source for Board membership criteria; amended the MCC Charter to clarify the oversight the MCC is exercising to align compensation policies and practices with stockholder interests, including those related to sustainability and climate change risks and opportunities; and amended the Public Policy and Sustainability Committee Charter to clarify the manner in which that Committee is assisting the Board with climate change and other sustainability issues, including changing the Committee name from “Public Policy Committee” to the “Public Policy and Sustainability Committee.” The Board also amended the Corporate Governance Guidelines to clarify that climate issues are included within the environmental experience that the Board seeks as part of the skills and qualifications for Board composition.

During engagements, a common theme among stockholders has been about the importance of diversity. Diversity and inclusion is the first value of The Chevron Way. Some stockholders suggested companies publish their Equal Employment Opportunity Report (“EEO-1”). Chevron responded quickly to include our 2018 EEO-1 report on our website.

A frequent topic in our ESG engagements with stockholders is climate change and the energy transition. Chevron was among the first oil and gas companies to publish a climate report aligned with the recommendations of the TCFD. In March 2021, Chevron released its fourth climate report. Chevron’s energy transition strategy is to advance a lower carbon future. The next section provides a high-level summary of Chevron’s approach to the energy transition.

 

 

chevron’s approach to the energy transition

Climate change and our approach to the energy transition is one of the frequent topics in our engagements with stockholders and other stakeholders. In 2020, we received four stockholder proposals specifically related to this topic. Many of the issues raised in these climate change–related proposals are addressed in Chevron’s TCFD-aligned reports as well as on our website. Below, we provide a high-level summary of how Chevron is advancing the global energy transition and helping to achieve a lower carbon future for all.

Chevron’s objective is to deliver higher returns, lower carbon. Chevron aims to be among the most efficient and responsible producers of energy. Chevron’s energy transition strategy is to advance a lower carbon future and strive for actions that drive measurable progress toward the global net zero ambitions of the Paris Agreement. Our strategy is focused on three specific action areas:

 

   

Lower carbon intensity cost efficiently

 

   

Increase renewables and offsets in support of our business

 

   

Invest in low-carbon technologies to enable commercial solutions

Through 2028, Chevron plans to spend approximately $3 billion in advancing our energy transition strategy, which includes $2 billion in carbon reduction projects, $750 million in renewables and offsets, and $300 million committed to the Future Energy Fund II.

Chevron’s energy-transition strategy is to help advance a lower carbon future. We aim to leverage our market position, assets, organizational capability, technology, and venture capital to pursue lower carbon opportunities and seek progress toward the ambitions of the Paris Agreement. We strive to apply our capabilities toward developing and commercializing breakthrough technologies, helping create lower carbon solutions that can compete effectively in the marketplace and ultimately achieve global scale.

Lower carbon intensity cost efficiently: In our first action area, we set metrics that communicate performance in the activities in which we participate. We establish our Upstream metrics on an equity basis and then on an individual commodity basis. We have established targeted carbon intensities for oil, gas, flaring, and methane to communicate our targeted performance transparently. In alignment with the Paris Agreement requirement that governments report their performance in five-year stocktakes, we have set metrics for 2023 and 2028 and intend to do so every five years thereafter. We have set 2016 as our baseline to align with the year the Paris Agreement came into force.

Our actions and progress are linked to virtually all employees’ compensation as part of the Chevron Incentive Plan (“CIP”) scorecard as described on pages 49 through 51. Below is a table of the Company’s adopted metrics:

 

     

 

Chevron Upstream emissions intensity reduction metrics for 2028:

 

 

24

 

  

 

kg CO2e/boe* for oil (global industry averages 46)

 

  

 

40% reduction from 2016

 

24

 

  

kg CO2e/boe* for gas (global industry averages 71)

 

  

 

26% reduction from 2016

 

2

 

  

kg CO2e/boe* for methane and a global methane detection campaign

 

  

 

53% reduction from 2016

 

0

 

  

routine flaring by 2030 and 3 kg CO2e/boe* for overall flaring

 

  

 

66% reduction from 2016

 

 

*

CO2e/boe = carbon dioxide equivalent/barrels of oil-equivalent

 

Chevron Corporation—2021 Proxy Statement       33


Table of Contents

 

corporate governance  

 

 

 

 

 

Scope 3

 

Chevron believes the world’s continued demand for oil and gas should be supplied by the cleanest and most efficient producers. Chevron addresses Scope 3 emissions, by taking the following actions:

 

(1)  Supporting a price on carbon through well-designed policies;

 

(2) Transparently reporting Scope 3 emissions from the use of our products; and

 

(3) Enabling customers to lower their emissions through increasing our renewable products, offering offsets, and investing in low-carbon technologies.

 

These contributions support a global approach to achieve the goals of the Paris Agreement as efficiently and cost-effectively as possible for society.

 

 

  

Increase renewables and offsets in support of our business: In our second action area, we are advancing opportunities to develop renewables and offsets that improve returns and help reduce Scope 2 and, in some cases, Scope 3 emissions. We are investing in renewable fuels, products, and power to reduce the carbon intensity of our operations and make energy and global supply chains more sustainable. By reducing carbon intensity across the supply chain, we have an even greater opportunity to help all others who rely on our products achieve their own lower carbon goals. We are also working to provide verified, low-cost, high-quality offsets to our customers around the world to help them achieve their own lower carbon goals.

Invest in low-carbon technologies to enable commercial solutions: Our third strategic focus is an integrated approach toward commercial solutions and technology. This includes supporting innovation and venture capital investment, deploying technologies that could be a part of a lower carbon future, and developing new commercial opportunities.

As part of our work on the energy transition, we aim to lead the industry in the transparency of our reporting so that we can hold ourselves responsible for our progress – and our stakeholders can hold us accountable. We support access to reliable, verifiable carbon-footprinted data that is critical to measure contributions toward meeting Paris Agreement goals. We believe that our key actions support a global approach to achieving the goals of the Paris Agreement as efficiently and cost-effectively as possible for society.

Our energy transition strategy is aligned with our core strengths and depends on leveraging our unique capabilities, assets, and expertise. Our goal is to invest in projects that build on these strengths, deliver attractive returns, and advance our shared ambition for a lower carbon future. As a Company, we are focused on improving returns from our capital investments. This discipline runs through our capital allocation, mergers and acquisitions decisions, and low-carbon investments, and helps ensure we have the financial strength to play a key role in the energy transition.

communicating with the board

The Governance Committee reviews interested-party communications, including stockholder inquiries directed to non-employee Directors. The Corporate Secretary and Chief Governance Officer compiles the communications, summarizes lengthy or repetitive communications and the responses sent, and takes further action, as appropriate. All communications are available to the Directors.

 

 

 

Interested parties wishing to communicate their concerns or questions about Chevron to the independent Lead Director or any other non-employee Director may do so by mail addressed to the Lead Director or Non-Employee Directors, c/o Office of the Corporate Secretary and Chief Governance Officer, 6001 Bollinger Canyon Road, San Ramon, CA 94583-2324 or by email to corpgov@chevron.com.

 

 

  

 

34       Chevron Corporation—2021 Proxy Statement


Table of Contents
 

 

  corporate governance  

 

 

related person transactions

 

review and approval of related person transactions

It is our policy that all employees and Directors must avoid any activity that is in conflict with, or has the appearance of conflicting with, Chevron’s business interests. This policy is included in our Business Conduct and Ethics Code. Directors and executive officers must inform the Chairman and the Corporate Secretary and Chief Governance Officer when confronted with any situation that may be perceived as a conflict of interest. In addition, at least annually, each Director and executive officer completes a detailed questionnaire specifying any business relationship that may give rise to a conflict of interest.

Your Board has charged the Governance Committee with reviewing related person transactions as defined by U.S. Securities and Exchange Commission (“SEC”) rules. The Governance Committee has adopted written guidelines to assist it with this review. Under these guidelines, all executive officers, Directors, and Director nominees must promptly advise the Corporate Secretary and Chief Governance Officer of any proposed or actual business and financial affiliations involving themselves or their immediate family members that, to the best of their knowledge after reasonable inquiry, could reasonably be expected to give rise to a reportable related person transaction. The Corporate Secretary and Chief Governance Officer will prepare a report summarizing any potentially reportable transactions, and the Governance Committee will review these reports and determine whether to approve or ratify the identified transaction. The Governance Committee has identified the following categories of transactions that are deemed to be preapproved by the Governance Committee, even if the aggregate amount involved exceeds the $120,000 reporting threshold identified in the SEC rules:

 

 

compensation paid to an executive officer if that executive officer’s compensation is otherwise reported in our Proxy Statement and if the executive officer is not an immediate family member of another Chevron executive officer or Director;

 

 

compensation paid to a Director for service as a Director if that compensation is otherwise reportable in our Proxy Statement;

 

 

transactions in which the related person’s interest arises solely as a stockholder and all stockholders receive the same benefit on a pro-rata basis;

 

 

transactions involving competitive bids (unless the bid is awarded to a related person who was not the lowest bidder or unless the bidding process did not involve the use of formal procedures normally associated with our competitive bidding procedures);

 

 

transactions involving services as a common or contract carrier or public utility in which rates or charges are fixed by law;

 

 

transactions involving certain banking-related services under terms comparable with similarly situated transactions;

 

transactions conducted in the ordinary course of business in which our Director’s interest arises solely because he or she is a director of another entity and the transaction does not exceed $5 million or 5 percent (whichever is greater) of the receiving entity’s consolidated gross revenues for that year;

 

 

charitable contributions by Chevron to an entity in which our Director’s interest arises solely because he or she is a director, trustee, or similar advisor to the entity and the contributions do not exceed, in the aggregate, $1 million or 2 percent (whichever is greater) of that entity’s gross revenues for that year; and

 

 

transactions conducted in the ordinary course of business where our Director’s interest arises solely because he or she owns an equity or limited partnership interest in the entity and the transaction does not exceed 2 percent of the total equity or partnership interests of the entity.

The Governance Committee reviews all relevant information, including the amount of all business transactions involving Chevron and the entity with which the Director or executive officer is associated, and determines whether to approve or ratify the transaction. A Director will abstain from decisions regarding transactions involving that Director or his or her family members.

related person transactions

A son of Mr. Joseph C. Geagea, Executive Vice President, Technology, Projects & Services, is employed by Chevron. In 2020, Mr. Geagea’s son, Carl J. Geagea, received compensation of $149,891, including salary, bonus, and customary employee benefits. In 2021, he is expected to receive compensation of approximately $162,323. These amounts reflect compensation that is consistent with the total compensation provided to other employees of the same level with similar responsibilities. In addition, Mr. Geagea’s brother, John T. Geagea, is employed as a contractor by International Inspection Centre Co. W.L.L (“Intrex”), a contractor firm of Chevron, and works solely on Chevron matters. In 2020, Chevron paid Intrex $4,983,283 and is expected to pay Intrex approximately the same in 2021. In 2020, Intrex paid John Geagea compensation in the amount of approximately $196,750, including salary and customary employee benefits, and is expected to pay him the same amount in 2021. These amounts reflect compensation that is consistent with the total compensation provided to other contractors of the same level with similar responsibilities. Dollar amounts for Intrex and John Geagea are based on the exchange rate at December 31, 2021.

 

 

Chevron Corporation—2021 Proxy Statement       35


Table of Contents

 

corporate governance  

 

 

 

board nominating and governance committee report

 

The Board Nominating and Governance Committee (the “Committee”) is responsible for recommending to the Board the qualifications for Board membership, identifying, assessing, and recommending qualified Director candidates for the Board’s consideration, assisting the Board in organizing itself to discharge its duties and responsibilities, and providing oversight of Chevron’s corporate governance practices and policies, including an effective process for stockholders to communicate with the Board. The Committee is composed entirely of independent Directors as defined by the New York Stock Exchange Corporate Governance Standards and operates under a written charter. The Committee’s charter is available on Chevron’s website at www.chevron.com/investors/corporate-governance/board-nominating-governance and is available in print upon request.

The Committee’s role in and process for identifying and evaluating prospective Director nominees, including nominees recommended by stockholders, is described in the “Election of Directors” section of this Proxy Statement. In addition, the Committee makes recommendations to the Board concerning Director independence, Board Committee assignments, Committee Chairs, Audit Committee “financial experts,” and the financial literacy of Audit Committee members. The Committee also reviews the process and the results of the annual performance evaluations of the Board, Board Committees, and individual Directors.

The Committee regularly reviews trends and recommends best practices, initiates improvements, and plays a leadership role in maintaining Chevron’s strong corporate governance structures and practices. Among the practices the Committee believes demonstrate the Company’s commitment to strong corporate governance are the following:

 

 

annual election of all Directors;

 

 

supermajority of independent Directors;

 

 

majority vote standard for the election of Directors in uncontested elections, coupled with a Director resignation policy;

 

 

annual election of the Chairman of the Board by independent Directors;

 

 

annual election of an independent Lead Director by independent Directors when the Chief Executive Officer is elected as Chairman;

 

annual performance assessment of the Board, Board Committees, and individual Directors;

 

 

Director retirement policy;

 

 

Director and executive officer succession planning;

 

 

confidential stockholder voting policy;

 

 

robust business conduct and ethics code for all Directors and employees;

 

 

director orientation program for new Directors and ongoing education for Directors;

 

 

minimum stock ownership guidelines for Directors and executive officers;

 

 

review and approval or ratification of “related person transactions” as defined by SEC rules;

 

 

policy to obtain stockholder approval of any stockholder rights plan;

 

 

proxy access;

 

 

one vote for each common stock;

 

 

right of stockholders to call for a special meeting; and

 

 

no supermajority voting provisions in the Restated Certificate of Incorporation or By-Laws.

Stockholders can find additional information concerning Chevron’s corporate governance structures and practices in Chevron’s Corporate Governance Guidelines, By-Laws, and Restated Certificate of Incorporation, copies of which are available on Chevron’s website at www.chevron.com/investors/corporate-governance and are available in print upon request.

Respectfully submitted on March 30, 2021, by members of the Board Nominating and Governance Committee of your Board:

Ronald D. Sugar, Chair

Wanda M. Austin

Alice P. Gast

D. James Umpleby III

 

 

36       Chevron Corporation—2021 Proxy Statement


Table of Contents
 

 

  corporate governance  

 

 

management compensation committee report

The Management Compensation Committee (the “Committee”) of Chevron has reviewed and discussed with management the Compensation Discussion and Analysis beginning on page 38 of this Proxy Statement. Based on such review and discussion, the Committee recommended to the Board of Directors of the Corporation that the Compensation Discussion and Analysis be included in this Proxy Statement and incorporated by reference into the Corporation’s Annual Report on Form 10-K.

Respectfully submitted on March 30, 2021, by members of the Management Compensation Committee of your Board:

 

Enrique Hernandez, Jr., Chair

Jon M. Huntsman Jr.

Ronald D. Sugar

D. James Umpleby III

audit committee report

 

Roles and responsibilities. The Audit Committee (the “Committee”) assists your Board in fulfilling its responsibility to provide independent, objective oversight of Chevron’s financial reporting and internal control processes. The Committee’s charter can be viewed on Chevron’s website at www.chevron.com under the tabs “Investors” and “Corporate Governance.”

Management is responsible for preparing Chevron’s financial statements in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”) and for developing, maintaining, and evaluating disclosure controls and procedures and internal control over financial reporting.

The Company’s independent registered public accounting firm – PricewaterhouseCoopers LLP (“PwC”) – is responsible for expressing an opinion on the conformity of Chevron’s financial statements with U.S. GAAP and on the effectiveness of Chevron’s internal control over financial reporting.

Required disclosures and discussions. In discharging its oversight role, the Committee reviewed and discussed with management and PwC the audited financial statements for the year ended December 31, 2020, as contained in the 2020 Annual Report on Form 10-K, and management’s and PwC’s evaluation of Chevron’s internal control over financial reporting. The Committee routinely met privately with PwC and discussed issues deemed significant by PwC and/or the Committee. The     

Committee has discussed with PwC the matters required to be discussed by Auditing Standard 1301, “Communications With Audit Committees,” as adopted by the Public Company Accounting Oversight Board (“PCAOB”).

In addition, the Committee discussed with PwC its independence from Chevron and Chevron’s management; received the written disclosures required by the PCAOB regarding PwC’s independence; and considered whether the provision of non-audit services was compatible with maintaining PwC’s independence.

Committee recommendation. In reliance on the reviews and discussions outlined above, the Committee recommended to your Board that the audited financial statements be included in Chevron’s Annual Report on Form 10-K for the year ended December 31, 2020, for filing with the U.S. Securities and Exchange Commission.

Respectfully submitted on February 24, 2021, by the members of the Audit Committee of your Board:

Charles W. Moorman IV, Chair

John B. Frank

Marillyn A. Hewson

Dambisa F. Moyo

Debra Reed-Klages

 

 

Chevron Corporation—2021 Proxy Statement       37


Table of Contents

executive compensation

compensation discussion and analysis

executive summary

business description and context

 

Chevron is a fully integrated company involved in many facets of the energy industry. We explore for, produce, and transport crude oil, natural gas, and natural gas liquids; process and transport liquefied natural gas; refine, market, and distribute transportation fuels and lubricants; manufacture and sell petrochemicals and additives; generate power; and develop and deploy technologies that enhance business value in multiple aspects of the Company’s operations. Our business is capital-intensive and has long investment horizons – most of our resource and manufacturing investments span decades. Most of our product sales are commodities, whose prices can be volatile, leading to fluctuating earnings and cash flow through price cycles. Following decade-low oil prices in 2016, crude prices strengthened in 2017 and 2018, leading to improved earnings and cash flow. In 2019, Brent oil prices declined 10 percent, on

average, versus the prior year amid continued volatility as reduced supply following OPEC production cuts and U.S. sanctions on Iran and Venezuela, was overshadowed by demand concerns about a slowing global economy. By late March 2020, the Brent oil price was under $20 per barrel, having declined more than 70 percent since December 31, 2019, mainly due to the significant decline in demand as a result of the COVID-19 pandemic and the breakdown in the OPEC+ talks about production levels. In late 2020, the Brent price had recovered to $50 per barrel, largely based on optimism that the availability of COVID-19 vaccines would lead to economic recovery and greater oil demand, and that OPEC+ producers’ supply cuts would be only gradually reduced. Oil price futures (as of March 25, 2021) indicate Brent prices may remain near the $60 per barrel level in 2021.

 

 

 

LOGO

Note:

(1)

Brent futures prices are as of March 25, 2021

 

Chevron demonstrated resilience in an extremely challenging business environment in 2020 – supported by a strong balance sheet and flexible capital program – through:

 

 

Maintaining consistent financial priorities with unchanged commitments to the dividend, capital discipline, and protecting the balance sheet;

 

 

Taking decisive actions to preserve cash, including timely and significant capital reductions, while supporting long-term value;

 

Executing a lower-risk, flexible, and disciplined capital program;

 

 

Acquiring a quality company at an attractive price;

 

 

Achieving production guidance; and

 

 

Delivering competitive total stockholder return (“TSR”) performance, albeit lagged the S&P 500 Index.

 

 

38       Chevron Corporation—2021 Proxy Statement


Table of Contents
 

 

  executive compensation  

 

 

Over the last 15 years, the Company’s dividend growth rate of 7.5 percent per year was nearly 4.5 times the peer group1 average, and was also higher than that of the S&P 500 Index. Our dividend yield2 was nearly three times higher than the S&P 500 Index at year-end. In January 2020, we raised our quarterly dividend per share by 8.4 percent, extending an annual dividend payment per share increase to 33 consecutive years. Two peers cut their quarterly dividend per share in 2020, ranging from 50 percent to 66 percent.

 

 

LOGO

Chevron continued to deliver competitive TSR performance among large-cap integrated energy companies1 over the one-, three-, five- and 10-year periods through the end of 2020.

The large-cap integrated energy companies underperformed the S&P 500 Total Return Index in TSR over these same periods, in part due to the significant drop in commodity prices since 2014.

Looking forward, we believe the Company is well positioned to deliver on our objective of higher returns, lower carbon, and superior stockholder value in any business environment by:

 

 

Driving higher return on capital employed (“ROCE”) through lower organic capital and exploratory spend, greater cost reductions, and more capital efficient investments;

 

 

 

Pursuing an energy transition strategy that supports our business and positions it for a lower carbon future; and

 

 

Generating cash flow with upside oil-price leverage and downside oil-price resilience.

We are focused on creating value for stockholders through a disciplined capital program, prioritizing high-return, low-execution-risk investments. We have an advantaged Upstream portfolio composed of long-duration, low-production decline assets (such as those in Australia, Kazakhstan, and the San Joaquin Valley), flexible, shorter cycle investments (such as the Permian and other shale and tight assets, infill drilling, and tiebacks), and an attractive queue of deepwater opportunities (such as the Gulf of Mexico, Brazil, and West Africa). We also have an efficient, returns-focused Downstream & Chemicals business.

We are helping advance a lower carbon future by lowering carbon intensity cost efficiently, increasing renewables and offsets in support of our business, and investing in low-carbon technologies to enable commercial solutions.

We believe our strategy positions Chevron to return cash to stockholders, today and into the future. We believe our financial strength and capital discipline can sustain our dividend in any reasonable price scenario while our portfolio is well positioned to generate excess cash in a rising commodity price environment. Finally, we have a strong management team, a talented organization, and a results-oriented culture, which we believe enable us to adapt to dynamic markets to deliver higher returns and lower carbon.

Notes:

1

Peer group: BP, ExxonMobil, Royal Dutch Shell, and Total. Dividends include both cash and scrip share distributions for European peers.

 

2

Dividend yield at year-end reflects Chevron’s fourth quarter 2020 dividend per share annualized, divided by Chevron’s closing stock price on December 31, 2020.

 

3

CAGR = Compound Annual Growth Rate

 

 

 

 

 

LOGO

Note:

(4)

Figures rounded.

 

Chevron Corporation—2021 Proxy Statement       39


Table of Contents

 

executive compensation  

 

 

 

highlights – 2020 compensation outcomes & 2021 program design changes

The Chevron Board Management Compensation Committee (“MCC”) maintained a disciplined and consistent approach through an extremely challenging year. The key compensation outcomes and program design changes include the following:

 

 

 

2020 Highlights

 

 
 

•  No adjustment to the annual bonus (i.e., Chevron Incentive Plan – “CIP”) scorecard, no modifications to Long-Term Incentive Plan (“LTIP”) metrics and objectives, and no repricing of underwater options.

 

•  No annual bonus (i.e., 2020 CIP award) for any Named Executive Officer (“NEO”).

 

•  Performance shares (2018-2020) vested at 97 percent of target value, reflecting a 120 percent modifier based on the predefined payout formula, a lower stock price and dividend accrual. The relative TSR comparison, which includes industry peers and the S&P 500 Total Return Index, has been consistently applied since 2017.

 

 
 

2021 Highlights and Changes

 

 
 

•  No change in any NEO’s 2021 salary.

 

•  No change in any NEO’s 2021 target compensation level.

 

•  Added Energy Transition as one of the four CIP performance categories – linking employees’ annual bonus to advancing a lower carbon future.

 

•  Added a second LTIP performance share metric, Relative ROCE Improvement – linking LTIP to our focus on delivering higher returns.

 

 

pay philosophy and plan design

 

The overall objective of our executive compensation program is to attract and retain management who will deliver long-term stockholder value in any business environment. Our compensation programs are designed with several important values and objectives in mind:

 

 

Pay competitively across all salary grades and all geographies; our target compensation is determined by benchmarking comparable positions at other companies of equivalent size, scale, complexity, capital intensity, and geographic footprint. We reference both oil industry peers and non-oil industry peers in this analysis. Refer to page 45 for additional details;

 

Balance short- and long-term decision making in support of a long-cycle-time business with a career-oriented employment model;

 

 

Pay for absolute and competitive performance, in alignment with stockholder returns; and

 

 

Apply compensation program rules in a manner that is internally consistent.

 

 

The material components of our executive compensation program are summarized in the following chart.

 

LOGO

 

 

40       Chevron Corporation—2021 Proxy Statement


Table of Contents
 

 

  executive compensation  

 

 

The MCC believes a large majority of each NEO’s target compensation should be at risk based on Company performance (approximately 92 percent for the CEO and 84 percent for the other NEOs), and the majority of this at-risk compensation should be tied to Chevron’s stock price. The amount NEOs eventually earn from their at-risk compensation will align strongly with what stockholders earn over that same period from their investment in Chevron.

 

2020 CEO                 

compensation mix                 

  

2020 other NEOs                    

compensation mix                    

 

LOGO

 

  

 

LOGO

 

LOGO

*Comprised of the following equity vehicles: 50% Performance Shares, 25% RSUs, 25% Stock Options

2020 named executive officers

 

 Chevron’s Named Executive Officers, or NEOs

 Michael K. Wirth, Chairman and Chief Executive Officer

 Pierre R. Breber, Vice President and Chief Financial Officer

 James W. Johnson, Executive Vice President, Upstream

 Joseph C. Geagea, Executive Vice President, Technology, Projects & Services

 Mark A. Nelson, Executive Vice President, Downstream & Chemicals

2020 NEO target compensation

The table below summarizes the 2020 target compensation opportunities the Board and the MCC approved for the NEOs. Details of Chevron’s compensation philosophy and design can be found starting on page 45.

 

Name

 

Base salary

   

Target CIP

   

LTIP target value

   

 

Target total  

compensation  

 

Michael K. Wirth

 

$

1,650,000

 

 

$

2,640,000

 

 

$

15,500,000

 

 

$

19,790,000

 

Pierre R. Breber

 

$

1,020,000

 

 

$

1,122,000

 

 

$

4,002,320

 

 

$

6,144,320

 

James W. Johnson

 

$

1,210,000

 

 

$

1,452,000

 

 

$

5,197,500

 

 

$

7,859,500

 

Joseph C. Geagea

 

$

1,020,000

 

 

$

1,122,000

 

 

$

4,002,320

 

 

$

6,144,320

 

Mark A. Nelson

 

$

950,000

 

 

$

1,045,000

 

 

$

4,002,320

 

 

$

5,997,320

 

These amounts may differ from those shown in the Summary Compensation Table, based on actual salary received during the calendar year, the actual CIP award resulting from 2020 performance, and differences between the MCC’s target LTIP valuation approach and the grant date fair value calculations as presented in the Summary Compensation Table.

 

Chevron Corporation—2021 Proxy Statement       41


Table of Contents

 

executive compensation  

 

 

 

The Summary Compensation Table also includes amounts for the change in pension value and all other compensation. The MCC made no changes or adjustments to pension policy or benefits in 2020. The change in CEO pension value remained high in 2020 due to a combination of actuarial factors that can vary in any given year, including for 2020:

 

 

Lower interest rates, which increased the present value of pension benefits, and

 

 

Promotional pay increases, notably for Mr. Wirth who became CEO in February 2018.

The annual pension value is not a current cash payment and will continue to fluctuate up or down, in any given year until an NEO’s retirement, based on the actuarial factors described in further detail in the footnotes to the Summary Compensation Table on page 61. Among the factors discussed, we anticipate that the impact of Mr. Wirth’s CEO promotional pay increase has now been largely accounted for in the pension value and will level off in future years. As a result, the Company expects to                         

report a substantially lower CEO pension accrual for 2021 and in future years, assuming other factors such as interest rates remain stable.

 

LOGO

 

(1)

Reported compensation refers to the values disclosed in the Summary Compensation Table.

 

 

response to say-on-pay advisory vote and stockholder engagement

 

Chevron follows a robust process to systematically engage with its key stockholders and proactively address issues of importance. Among the issues routinely discussed in these engagements are Chevron’s executive compensation practices.

In 2020, the Company continued its dialogue with stockholders. We had substantive engagements with stockholders regarding environmental, social, and governance issues, representing more than 38 percent of Chevron’s outstanding common stock. These discussions covered a range of topics, including executive compensation. The CEO, Michael K. Wirth, the independent Lead Director, Dr. Ron Sugar, and the Chair of the Public Policy Committee, Dr. Wanda Austin, participated in engagements with certain major stockholders. Through these engagements, we continued to receive positive feedback for the current program design, such as including the S&P 500 Total Return Index in the LTIP Performance Share Peer Group and including greenhouse gas intensity reduction measures in the CIP scorecard.

Chevron’s 2020 Say-on-Pay vote received over 92 percent support, which demonstrates stockholders’ strong support of our executive compensation practices and pay for performance alignment.

During our engagements, stockholders also expressed appreciation of our adoption of an energy transition strategy that supports the business and positions the Company to be resilient in a lower carbon future, and our focus on increasing return on capital employed to sustain the dividend. To further align executive compensation with stockholder               

interests, the MCC approved the following program changes effective 2021:

 

 

Energy Transition measures in the 2021 CIP scorecard. We have modified the 2021 CIP scorecard to include an “Energy Transition” category. Performance will be measured against the Company’s progress towards reducing GHG intensity, increasing renewable energy and carbon offsets, and investing in low-carbon technologies. The scorecard performance outcomes impact CIP payout for our eligible employees – approximately 40,000 at year-end 2020.

 

 

Relative ROCE Improvement in the 2021 performance share grant. We added “Relative ROCE Improvement” as a second performance metric to the 2021 performance share grant. Performance shares will continue to represent 50 percent of the LTIP grant value, with payout weighted 70 percent based on relative TSR against the LTIP Performance Share Peer Group and 30 percent based on Relative ROCE Improvement against large-cap integrated energy companies (BP, ExxonMobil, Royal Dutch Shell, and Total).

Chevron and the MCC believe both these changes reinforce our objective of “higher returns, lower carbon” and are responsive to views expressed by our stockholders.

Our stockholders’ views on executive compensation are important to us, and the MCC regularly considers the Say-on-Pay vote outcome and stockholder insights in assessing our executive compensation program. We remain committed to continuing the dialogue with stockholders on compensation issues as part of our ongoing engagement.

 

 

2020 performance

 

Chevron’s 2020 financial results were weak driven by global economic conditions and COVID-19, which negatively impacted Upstream realizations and Downstream margins and volumes. However, we               

demonstrated resilience during the year – supported by a strong balance sheet and flexible capital program. We remained committed to consistent

 

 

42       Chevron Corporation—2021 Proxy Statement


Table of Contents
 

 

  executive compensation  

 

 

financial priorities, including maintaining the dividend, pursuing a disciplined capital program, and protecting the balance sheet while achieving key operational objectives and project milestones.

 

 

We delivered 3.131 million barrels of oil-equivalent per day in net production, excluding divestments, at the upper-end of our 0 to 3 percent guidance range. This was accomplished during a challenging year to operate safely and reliably.

 

 

We made substantial progress on major capital projects and improving capital efficiency. The Tengizchevroil (“TCO”) Future Growth Project / Wellhead Pressure Management Project (“FGP/WPMP”) completed module fabrication, all sealift activities, and the restack on foundations of four Pressure Boost Facility compressor modules. However, the integration of the Third Generation Project (“3GP”) / Third Generation Gas Injection Plant (“3GI”) utility modules was delayed due to the reprioritization of activity following COVID-19 demobilizations of personnel. In the Permian, unit development costs continued to improve, despite lower capital investment and market-driven production curtailments.

 

 

Organic capital and exploratory (“C&E”) spending of $13.1 billion was significantly below the Company’s original 2020 budget of $20 billion—exceeding the 30 percent ($6 billion) targeted reduction.

 

 

We demonstrated a strong commitment to capital discipline by acquiring Noble Energy, Inc. (“Noble Energy”) at a low premium and attractive stock price.

 

 

Our balance sheet remained strong, ending the year with a 22.7 percent net debt ratio, including the debt assumed from the Noble Energy acquisition.1

 

 

Operating expense was $25.4 billion slightly better than Plan. Severance charges of approximately $900 million mostly offset cost           

   

savings in 2020. Since 2014, operating expense have declined 15 percent.

 

 

Five-year reserve replacement ratio was 98 percent, reflecting the sustainability of our business at current prices, and our 2020 reserve replacement ratio of 74 percent, including the impact of divestitures, write-offs, and the Noble Energy acquisition.

 

 

Our balance sheet remained strong, ending the year with a 25.2 percent debt ratio and 22.7 percent net debt ratio, including the debt assumed from the Noble Energy acquisition.1

 

 

We grew our annual dividend by 8.4 percent, or $0.40 per share, to $5.16, representing the 33rd consecutive annual increase. At year-end, Chevron’s dividend yield was nearly 4 percentage points higher than the dividend yield of the S&P 500 Index. In 2020, we returned $11.4 billion in dividends and share buybacks to our stockholders.

Looking forward, we believe the Company is well positioned to deliver on our objective of higher returns, lower carbon, and superior stockholder value creation in any environment. We are focused on improving ROCE to sustain our leading dividend and lowering carbon intensity to advance a lower carbon future. Our 2021 C&E program continues a disciplined approach to investment. We continue to invest in digital technologies to enhance safety, increase revenues, lower costs, and improve reliability. Our strategy positions Chevron to return cash to stockholders today and into the future. We believe our financial strength and capital discipline can sustain our dividend in any reasonable price scenario while our portfolio is well positioned to generate excess cash in a rising commodity price environment.

Note:

1

A definition of net debt ratio, and reconciliation of net debt ratio to debt ratio, is included on pages 45 through 46 of our Annual Report on Form 10-K for the year ended December 31, 2020.

 

 

LOGO    LOGO

Notes:

(2)

Total capital and exploratory expenditures include equity in affiliates. Figures rounded.

 

(3)

Operating expenses, selling, general and administrative expenses and other components of net periodic benefit costs as reported in the consolidated statement of income (excludes affiliate spend). Figures rounded.

 

Chevron Corporation—2021 Proxy Statement       43


Table of Contents

 

executive compensation  

 

 

 

CEO realizable pay

 

The MCC establishes Mr. Wirth’s target compensation based on several factors, including an external comparison of compensation opportunities for CEOs at companies of comparable size, scope, and complexity, and utilizing a consistent application of Chevron’s internal compensation policies and structure.

The MCC believes that the CEO’s realizable compensation should align with stockholder value creation and relative TSR performance. The following charts compare Mr. Wirth’s target and realizable compensation      

as of December 31, 2020, for compensation opportunities awarded to him in 2018, 2019, and 2020. In each of the three years shown, the realizable value of Mr. Wirth’s compensation package as of December 31, 2020, is significantly lower than the target value, due primarily to Chevron’s stock price performance. The ultimate realized values will match or exceed targets only when Chevron’s common stock price increases and relative TSR improves.

 

 

LOGO

Notes

(1)

Target Value reflects: (i) base salary rate each year, (ii) target CIP award, and (iii) intended grant date value of LTIP awards (50 percent performance shares, 25 percent restricted stock units, and 25 percent stock options).

 

(2)

Realizable Value at 12/31/2020 reflects: (i) paid base salary during the calendar year; (ii) the actual CIP award earned for that year, and (iii) the actual prevailing LTIP value at 12/31/2020. For (i) 2019 and 2020 performance shares: reflects 12/31/2020 TSR rank versus the LTIP Performance Share Peer Group and associated performance modifier (120 percent for both 2019 and 2020 grants) multiplied by Chevron’s stock price at 12/31/2020 ($84.45), including dividend accrual; and (ii) for the 2018 performance shares: the amount earned and paid at 120 percent using the 20-day average trailing price of Chevron common stock at 12/31/2020 ($88.27), including dividend accrual. For restricted stock units, reflects Chevron’s stock price at 12/31/2020 ($84.45) including dividend accrual. For stock options reflects that none of the past three awards is currently “in the money,” with exercise prices of $125.35 (2018), $113.01 (2019), and $110.37 (2020) relative to Chevron’s common stock price at 12/31/2020 of $84.45.

 

44       Chevron Corporation—2021 Proxy Statement


Table of Contents
 

 

  executive compensation  

 

 

compensation discussion and analysis in detail

compensation planning and governance

The graphic below illustrates the timing and key governance elements of the executive compensation planning cycle:

 

LOGO

use of peer groups

We are always competing for the best talent with our direct industry peers and with the broader market. Accordingly, the MCC regularly reviews the market data, pay practices, and compensation ranges among both oil industry peers and non-oil industry peers to ensure that we continue to offer a reasonable and competitive executive pay program. Our core peer group is reviewed regularly by the MCC, with input from the MCC’s independent compensation consultant, and updated as appropriate. Throughout this Compensation Discussion and Analysis, we refer to three distinct peer groups, as described below. We source peer company data from compensation consultant surveys and public disclosures.

 

Peer group

  

Description

 

Oil industry peer group (11 companies)

  

 

Companies with substantial U.S. or global operations that closely approximate the size, scope, and complexity of our business or segments of our business.

 

This is the primary peer group used to understand how each NEO’s total compensation compares with the total compensation for reasonably similar industry-specific positions.

 

Anadarko was removed from the benchmarks for 2020 compensation actions due to its acquisition by Occidental. Devon will be removed from the benchmarks for 2021 compensation actions due to its withdrawal from the reported survey data.

 

Non–oil industry peer group (14 companies)   

Companies of significant financial and operational size that have, among other features, global operations, significant assets and capital requirements, long-term project investment cycles, extensive technology portfolios, an emphasis on engineering and technical skills, and extensive distribution channels.

 

This is the secondary peer group used to periodically compare our overall compensation practices against a broader mix of non-oil companies that are similar to Chevron in size, complexity, and scope of operations.

 

In March 2019, the MCC approved the removal of GE from the benchmarks for 2020 compensation actions, due to change in its size and comparability.

 

In June 2019, DowDupont split into three companies. The new Dupont de Nemours was retained in the benchmark referenced for 2020 compensation actions and will be removed for benchmarking for 2021 compensation actions.

 

LTIP performance share peer group

(four companies & one stock index)

  

Companies used to compare our TSR for the purpose of determining performance share payout: BP, ExxonMobil, Royal Dutch Shell, Total, and the S&P 500 Total Return Index.

 

The inclusion of the S&P 500 Total Return Index broadens the performance benchmark beyond industry peers and requires Chevron to outperform both industry peers and a market-based index in order to receive maximum payout. The MCC believes this further aligns executive pay with long-term stockholder interests.

 

Effective with the 2021 grant, a second metric – Relative ROCE Improvement – was added and measured against the large-cap integrated energy companies (BP, ExxonMobil, Royal Dutch Shell, and Total).

 

 

Chevron Corporation—2021 Proxy Statement       45


Table of Contents

 

executive compensation  

 

 

 

The energy companies most similar to Chevron in size, complexity, geographic reach, business lines, and location of operations are BP, ExxonMobil, Royal Dutch Shell, and Total. These companies are key competitors for stockholder investments within the larger global energy sector. We also compete for stockholder investment and employee talent with smaller U.S. companies, including the larger independent exploration     

and production companies and the larger independent refining and marketing companies. The Non–Oil Industry Peer Group includes capital-intensive, global, large-scale, and high-complexity companies. The median market cap (as of 12/31/2020) of the Non–Oil Industry Peer Group was $173 billion (vs. $163 billion for Chevron), and the median sales for 2020 were $62 billion (vs. $94 billion for Chevron).

 

 

LOGO   LOGO

 

LOGO

 

Note:

(1)   Total is part of the LTIP Performance Share Peer Group but not part of the Oil Industry Peer Group due to its limited U.S. operations.

base salary

 

Base salaries are determined through market surveys of positions of comparable level, scope, complexity, and responsibility. There is no predetermined target or range within the Oil Industry Peer Group or the Non–Oil Industry Peer Group as an objective for Mr. Wirth’s base salary. Instead, the MCC takes into account the data provided by the MCC’s independent consultant, the relative size, scope, and complexity of our business, Mr. Wirth’s performance and tenure, and the aggregate amount of Mr. Wirth’s compensation package. For the other NEOs, each executive officer is assigned a base salary grade based on competitive

data and relative internal parity of the role. The MCC annually reviews the base salary grade ranges and may approve changes in the ranges based on business conditions and comparative peer group data provided by the MCC’s independent consultant. Within each salary grade range, the MCC makes base salary determinations for each NEO taking into account qualitative considerations, such as individual performance, experience, skills, retention objectives, and leadership impact. The independent Directors of the Board approve the compensation of the CEO and ratify the compensation of the other NEOs.

 

 

46       Chevron Corporation—2021 Proxy Statement


Table of Contents
 

 

  executive compensation  

 

 

adjustments in 2020 base salaries

 

The independent Directors of the Board, upon recommendation of the MCC, increased Mr. Wirth’s salary based on his 2019 performance and the salary of other CEOs among oil and non-oil peer groups. The MCC also adjusted the NEO salary grade ranges by 1 percent for the 2020 compensation cycle after taking into account market conditions and             

survey data. As to individual NEO salary changes, the MCC made salary adjustments reflective of each NEO’s 2019 performance, experience, and competitive benchmarks. All NEOs’ salary increases were effective on April 1, 2020.

 

 

Name      Position  

 

2019
Base salary*

   

 

2020
Base salary*

   

 

Adjustment

for 2020

 

 

Michael K. Wirth

 

 

 

Chairman and Chief Executive Officer

 

 

 

$

 

 

    1,600,000

 

 

 

 

 

 

$

 

 

    1,650,000

 

 

 

 

 

 

 

 

 

3.1

 

 

 

 

Pierre R. Breber

 

 

 

Vice President and Chief Financial Officer

 

 

 

$

 

 

1,000,000

 

 

 

 

 

 

$

 

 

1,020,000

 

 

 

 

 

 

 

 

 

2.0

 

 

 

 

James W. Johnson

 

 

 

Executive Vice President, Upstream

 

 

 

$

 

 

1,200,000

 

 

 

 

 

 

$

 

 

1,210,000

 

 

 

 

 

 

 

 

 

0.8

 

 

 

 

Joseph C. Geagea

 

 

 

Executive Vice President, Technology, Projects & Services

 

 

 

$

 

1,000,000

 

 

 

 

$

 

1,020,000

 

 

 

 

 

 

2.0

 

 

Mark A. Nelson

 

 

 

Executive Vice President, Downstream & Chemicals

 

 

 

$

 

    900,000

 

 

 

 

$

 

950,000

 

 

 

 

 

 

5.6

 

 

*

Base salary refers to the approved annual salary rate as of the effective date.

adjustments in 2021 base salaries

 

In January 2021, the independent Directors of the Board, upon recommendation of the MCC, made no change to Mr. Wirth’s salary. In addition, after taking into account market conditions and survey data, the MCC made no changes to any of the other NEO base salaries for the           

2021 compensation cycle. See the Summary Compensation Table on page 60 for more information on base salary changes over time.

 

 

annual incentive plan (chevron incentive plan)

 

The Chevron Incentive Plan is designed to recognize annual performance achievements based on the MCC’s assessment of Company performance across four categories: financial results, capital management, operating performance, and health, environmental and safety performance. Each category contains multiple performance measures, reflecting outcomes of both short-term and long-term measures on absolute and relative performance, as well as the performance trend over time.

The award is delivered as an annual cash payment based on an individual bonus component reflecting executive leadership and performance, multiplied by the Corporate Performance Rating. The CIP award determination process is consistent across approximately 40,000 CIP-eligible Chevron employees, with the award target varying by pay grade. See page 41 for the target CIP value for each NEO.

 

 

 

 

2020 CIP Highlights

 

 
 

•  No adjustment to the annual bonus (i.e., CIP) scorecard.

 

•  No annual bonus (i.e., 2020 CIP award) for any NEO.

 

 
 

2021 CIP Highlights and Changes

 

 
 

•  Added Energy Transition as one of the four CIP performance categories – linking employees’ annual bonus to advancing a lower carbon future.

 

 

 

Chevron Corporation—2021 Proxy Statement       47


Table of Contents

 

executive compensation  

 

 

 

The CIP award for the CEO and the other NEOs is calculated as follows:

 

   

Corporate Performance Rating   

 

x  

  Individual Bonus Component     

(base salary x bonus percentage)

 

À À

 

At the beginning of each performance year, the MCC reviews and approves the annual performance measures, weightings, and goals established with the Business Plan. After the end of the performance year, the MCC reviews and assesses Company performance metrics and sets the Corporate Performance Rating based on a range of measures in four categories.

 

Performance is viewed across multiple parameters (i.e., absolute results; results vs. Business Plan; results vs. Oil Industry Peer Group and/or general industry; performance trends over time). The performance measures are also assessed taking into account the elements that may be market- driven or otherwise beyond the control of management. See pages 49 and 50 for a discussion of 2020 performance.

 

The minimum Corporate Performance Rating is zero (i.e., no award), and the maximum is two (i.e., 200 percent).

 

 

The Individual Bonus Component (IBC) is determined by the MCC taking into account competitive bonus targets among oil peers and individual performance.

 

Before the beginning of each performance year, the MCC establishes a target as a percentage of the NEO’s base salary, which is set with reference to target opportunities found across Chevron’s Oil Industry Peer Group. The MCC then establishes a bonus range, which is 75 to 125 percent of the target for the 2020 performance cycle. All CIP participants in the same salary grade have the same target and bonus range, which provides for internal equity and consistency.

 

At the end of the performance year, the MCC determines the IBC for each NEO by selecting a percentage point within the bonus range based on an assessment of individual performance, including personal effort and initiative, business unit performance, and the individual’s leadership impact on the enterprise. Under extraordinary circumstances, the IBC may be adjusted upward or downward, including to zero, for any employee at the sole discretion of the MCC.

 

The CEO recommends to the MCC an IBC for each NEO other than himself.

 

The MCC recommends the IBC for the CEO and approves the IBC for the other NEOs. The independent Directors of the Board approve the IBCs for the CEO and ratify the IBCs for the other NEOs.

 

 

 

Overall award capped at 200 percent of target

 

Chevron goes through a rigorous goal-setting and performance review process to determine the CIP Corporate Performance Rating. Annually, Business Plan objectives are determined after thorough reviews and approvals by the Enterprise Leadership Team (“ELT”), a subcommittee of the Executive Committee, and the Board. The ELT is responsible for setting objectives that challenge the Company to optimize strategies and portfolio composition and to improve operational performance to create        

stockholder value. Robust annual performance measures, weightings, and goals are established with the Business Plan, subject to review and approval by the MCC. Mid-year and end-of-year reviews by the Board and the MCC systematically assess progress against these measures. The MCC has discretion in determining CIP awards, which includes discretion to set the award to zero if conditions warrant it.

 

 

2020 CIP corporate performance rating

 

In January 2021, the MCC evaluated Chevron’s 2020 performance across the four CIP categories: financial results, capital management, operating performance, and health, environmental and safety performance. A raw score range was assigned based on the Company’s actual performance with respect to the particular performance measures comprising each category as measured against the Company’s Plan. This raw score can span from zero (reflecting very poor performance) to two (reflecting outstanding performance) for each category. Category weights are then applied to the raw score ranges to determine an overall range. When determining the Corporate Performance Rating, the MCC may apply discretion when assessing the Company’s performance.

The MCC determined that all NEOs would not receive a cash bonus for the 2020 performance cycle (see page 49 for additional details). Accordingly, the CIP Corporate Performance Rating did not apply to the NEOs in 2020.

For all remaining CIP eligible employees, the MCC assigned an overall 2020 CIP Corporate Performance Rating of 0.75. This rating ranked among the lowest in the Company’s history. The MCC determined that it accurately reflected the Company’s 2020 performance against the measures and also considered the extraordinary workforce effort to deliver safe and reliable energy during a global pandemic.

 

 

48       Chevron Corporation—2021 Proxy Statement


Table of Contents
 

 

  executive compensation  

 

 

Specific inputs to the MCC’s evaluation are summarized below.

 

Category   Weight     Performance measures  

 

Year-end results vs. Plan

highlights

“Plan” refers to Board-

approved Business Plan

    Results(1)     Raw score  

  (0.00 - 2.00)   

    Weighted    

score  

           

Financial    

results    

  40%  

Earnings(2)

 

-$5.5B, significantly below Plan primarily driven by global economic conditions and COVID-19, resulting in lower Upstream realizations and Downstream margins and volumes, along with impairments and write-offs. Normalized earnings below Plan. 5-year EPS performance versus peers negatively impacted.

  LOGO   0.20 – 0.30    0.08 – 0.12 
 

 

Cash flow(3)

 

 

$10.6B, significantly below Plan. Normalized for price / market effects, slightly below Plan.

 

 

LOGO

 

Divestiture proceeds

 

 

$2.9B, below Plan, largely due to timing. Delivered proceeds above mid-point of $5B to $10B program guidance range (2018-2020).

  LOGO  

0.70 – 0.80

 

0.21 – 0.24 

Capital    

management    

  30%  

Return on capital employed(4)(5)

 

 

-2.8%, significantly below Plan, mainly due to lower earnings. Improved position relative to peers over 5-year period.

  LOGO
 

Organic Capital and exploratory expenditures, including equity in affiliates

 

 

$13.1B, significantly better than Plan and exceeded announced 30% target reduction for 2020.

 

LOGO

  Major milestones  

FGP / WPMP

 

 

Completed module fabrication, all sealift activities, and restack / set on foundations of four Pressure Boost Facility compressor modules. Integration of 3GP / 3GI utility modules delayed due to resource reprioritization after COVID-19 demobilizations.

  LOGO
  Permian  

 

Met unit development cost objective.

  USGC II
Petrochemicals
 

 

Completed FEED in 4Q2020; project on hold.

           

Operating    

performance

  15%  

Net production, excluding impact of divestments

 

 

Annual growth at upper end of 0-3% guidance range.

  LOGO   0.90 – 1.00    0.14 – 0.15 
 

Operating expense(6)

 

$25.4B, slightly better than Plan despite severance charges.

  LOGO
 

 

Refining utilization, including joint ventures and affiliates

 

 

Short of Plan by 10.6 percentage points, largely due to COVID-19 impacts.

  LOGO
           

Health,    

environmental,    

and safety

  15%  

Personal safety(4,7,8)

 

 

Total Recordable Injury rate led industry. Serious Injury count significantly better than Plan. Gaps in fatality prevention.

  LOGO   1.50 – 1.60    0.23 – 0.24 
 

Process safety and environmental

 

Record low with zero Severe Tier 1 loss of containment (“LOC”) incidents. LOC and spill volumes better than Plan.

  LOGO
 

Greenhouse gas management

 

 

On track to achieve oil, gas, flaring, and methane intensity reductions.

  LOGO
   
        Corporate Performance Rating Range     0.65 – 0.75 
   
        Final Corporate Performance Rating for NEOs    
   
        Final Corporate Performance Rating for remaining employees     0.75

Notes:

(1)

Results refer to met / exceeded Plan (green), met Plan with some gaps (yellow), or did not meet Plan (red).

 

Chevron Corporation—2021 Proxy Statement       49


Table of Contents

 

executive compensation  

 

 

 

(2)

Normalized earnings exclude market factors beyond the control of management, including commodity price, foreign exchange, and uncontrollable tax impacts; comparison more accurately measures controllable performance.

 

(3)

Cash Flow From Operating Activities as reported in the 2020 Consolidated Statement of Cash Flows; normalized cash from operating activities excludes the impact of commodity price and Downstream market and price effects.

 

(4)

Relative peer comparisons based on externally disclosed results through the end of 3Q20.

 

(5)

See ROCE calculation on page 46 and “Definitions of Selected Financial Terms” in Exhibit 99.1 of the Chevron Annual Report on Form 10-K for the year ended December 31, 2020.

 

(6)

Operating expenses, selling, general, and administrative expenses, and other components of net periodic benefit costs as reported in the 2020 Consolidated Statement of Income (excludes affiliate spending). Figures rounded.

 

(7)

Total Recordable Incident Rate – sum of fatalities, DAFW cases, restricted duty (work activity) cases, and “other recordable” cases, per 200,000 work hours.

 

(8)

Serious Injury – injury that results in permanent or long-term impairment of an internal organ, body function, or body part.

financial results—40 percent

 

 

Earnings—2020 reported earnings of -$5.5 billion were significantly below Plan, mainly due to lower Upstream realizations, impairments and write-offs totaling $5.0 billion, lower-than-planned Downstream margins and volumes, and asset sales timing. Similarly, normalized earnings were well below Plan. The Company’s five-year indexed Earnings per Share performance relative to peers was adversely affected by its Upstream-weighted (vs. Downstream) and oil-weighted (vs. natural gas) portfolio amid the oil price collapse in 2020.

 

 

Cash flow—Chevron delivered operating cash flow of $10.6 billion in 2020, significantly below Plan. Normalized for oil price and Downstream market / price effects, slightly below Plan.

 

 

Divestiture proceeds—$2.9 billion in asset sales proceeds were realized for the year. The Company achieved its divestiture program objective by delivering $7.7 billion in asset sales proceeds over the three-year period of 2018 to 2020, in the middle of the guidance range of $5 billion to $10 billion.

 

 

Based on the preceding, the raw score range assigned to this category for the 2020 performance year was 0.20-0.30 out of a maximum of 2.0.

capital management—30 percent

 

 

Return on capital employed—Reported ROCE for 2020 of -2.8 percent was below Plan, mainly driven by lower earnings. The Company’s five-year ROCE, excluding special items, performance improvement was ranked second relative to peers.

 

 

Capital and exploratory expenditures—2020 organic C&E totaled $13.1 billion, significantly better than and exceeded the Company’s announced 30 percent ($6 billion) target reduction.

 

 

Major milestones per Plan:

 

   

Tengizchevroil FGP/WPMP—Achieved milestones for module fabrication, all sealift activities, and the restack on foundations of four Pressure Boost Facility compressor modules. Integration of 3GP / 3GI utility modules was delayed to 2021 due to the reprioritization of activities following COVID-19 demobilizations of personnel.

 

   

Permian—Unit development cost met objective.

   

USGC II Petrochemicals—Completed U.S. Gulf Coast (USGC) II Project Front-End Engineering & Design (FEED). Project on hold.

 

 

Based on the preceding, the raw score range assigned to this category for the 2020 performance year was 0.70-0.80 out of a maximum of 2.0.

operating performance—15 percent

 

 

Net production—3.131 million barrels of oil-equivalent per day in 2020, excluding divestments. Annual growth rate at the upper-end of our 0-3 percent external guidance range (vs. 2019) – including production curtailments, significant reductions in organic capital spend (including Permian), and Noble Energy acquisition.

 

 

Operating expense—$25.4 billion, slightly better than Plan. Severance charges mostly offset cost savings in 2020. Since 2014, absolute costs have declined 15 percent.

 

 

Refining utilization—Rates were intentionally below Plan by 10.6 percentage points, primarily due to the significant decline in demand caused by COVID-19. The Company took steps to help mitigate the financial impact of this reduced demand, including temporarily shutting some refinery units, minimizing crude rates, and leveraging the strength of its value chains to match production with demand.

 

 

Based on the preceding, the raw score range assigned to this category for the 2020 performance year was 0.90-1.00 out of a maximum of 2.0.

health, environmental and safety—15 percent

 

 

Personal safety—Industry-leading Total Recordable Incident rate and matched record low Serious Injury count for the Company in 2020. Opportunity for improvement remains in preventing fatality incidents.

 

 

Process safety and environmental—Achieved record low with zero Severe Tier 1 incident count for the Company. Loss of containment performance and spill volume was better than Plan.

 

 

Greenhouse gas management—On-track to achieve oil, gas, flaring, and methane intensity reductions.

 

 

Based on the preceding, the raw score range assigned to this category for the 2020 performance year was 1.50-1.60 out of a maximum of 2.0.

 

 

50       Chevron Corporation—2021 Proxy Statement


Table of Contents
 

 

  executive compensation  

 

 

2020 NEO CIP awards

 

In January 2020, the Independent Directors of the Board approved a 2020 CIP award target of 160 percent for Mr. Wirth, an increase from 150 percent in 2019. There was no change to the other NEOs’ CIP targets for 2020.

In making 2020 CIP award decision, the MCC and the independent Directors of the Board assessed corporate, individual performance, and business unit achievement along all four categories of CIP measurements, as well as how the leadership team responded to the COVID-19 pandemic and market volatility. In addition, the MCC factored      

into consideration the experience of our stockholders, our employees, and our communities. Notwithstanding Chevron’s operational and safety performance and strong Company leadership demonstrated during an unprecedented year, the Board and the MCC determined that Mr. Wirth and the other NEOs would not receive a bonus for the 2020 performance cycle given the Company’s negative earnings for the year and overall financial performance.

 

 

2021 CIP – new energy transition measures

 

In early 2021, the MCC approved the addition of an “Energy Transition” performance category to the 2021 CIP scorecard. This important addition responds to investor input and reinforces Chevron’s focus on advancing a lower carbon future. This new category will have a 10 percent weighting,

and will measure Chevron’s progress toward reducing GHG intensity, increasing renewable energy and carbon offsets, and investing in low-carbon technologies. The scorecard performance outcomes impact CIP payout for approximately 40,000 eligible employees.

 

 

long-term incentive plan

 

The key objective of our Long-Term Incentive Plan is to encourage performance that drives stockholder value over the long-term. The target value of an NEO’s LTIP award at the time of grant is determined by the MCC, with input from its independent compensation consultant and referencing external benchmark comparisons. The objective is to ensure that Chevron is competitive against its industry peer companies on the overall target compensation (cash plus equity), after allowing for appropriate differentiation based on size, scale, scope, and job responsibilities.

Each year in January, the MCC determines a target value for LTIP awards for the CEO and the other NEOs based on industry competitive data. These awards provide incentive compensation opportunities tied to Chevron’s future long-term performance.

In setting the LTIP target value for the CEO, the MCC relies on input from its independent compensation consultant and benchmark research, focusing on the form and amount of similar compensation opportunities in the Oil Industry Peer Group. The MCC also considers the CEO’s demonstrated performance, and the Company’s size, scope, and complexity relative to the comparison companies. Similarly, for the other NEOs, the MCC sets an annual LTIP target value for each salary grade as a multiple of salary, referencing median incentive opportunities for executives in similar positions at companies in the Oil Industry Peer Group.

The LTIP award represents a pay opportunity. The ultimate realized value of equity-based awards is determined by absolute and relative stock price performance over a three- to 10-year period.

 

 

 

 

2020 LTIP Highlights

 

 
 

•  No modifications to LTIP metrics and objectives, and no repricing of underwater options.

 

•  Performance shares (2018-2020) vested at 97 percent of target value, reflecting a 120 percent modifier based on the predefined payout formula, a lower stock price and dividend accrual. The relative TSR comparison, which includes industry peers and the S&P 500 Total Return Index, has been consistently applied since 2017.

 

 
 

2021 LTIP Highlights and Changes

 

 
 

•  Added a second LTIP performance share metric, Relative ROCE Improvement – linking LTIP to our focus on delivering higher returns.

 

 

 

Chevron Corporation—2021 Proxy Statement       51


Table of Contents

 

executive compensation  

 

 

 

The LTIP program comprises the following three equity vehicles:

 

Component

 

 

 

2020
Proportion

 

 

How it works

 

 

Performance shares

  50%  

•  Payout is dependent on Chevron’s TSR over a three-year period, compared with TSRs of our LTIP Performance Share Peer Group. For the 2020 grant, the peer group is: ExxonMobil, BP, Shell, Total, and the S&P 500 Total Return Index.

 

   
     

 

Relative TSR ranking

 

 

 

1  

 

 

 

2  

 

 

 

3  

 

 

 

4  

 

 

 

5  

 

 

 

6  

 

   
   
     

2020 grant payout as a % of target

 

  200%

 

  160%

 

  120%

 

  80%

 

  40%

 

  0%

 

   
   
 

 

 

 

 

•  Performance shares accrue dividend equivalents that are reinvested as additional shares, to be paid at the end of the performance period and are subject to the same three-year cliff vesting schedule and performance modifier.

 

•  The MCC can exercise negative discretion to reduce the payout.

 

•  Actual number of shares granted is determined by dividing the proportionate value of the NEO’s LTIP award by Chevron’s closing common stock price on the grant date.

 

•  Payment is made in cash. Refer to Footnote 2 on pages 66 and 67 for calculation details.

 

   
   

RSUs

  25%  

•  Actual number of RSUs granted is determined by dividing the proportionate value of the NEO’s LTIP award by Chevron’s closing common stock price on the grant date.

 

•  Five-year cliff vesting lengthens equity holding time, which enhances retention and alignment with stockholders.

 

•  RSUs accrue dividend equivalents that are reinvested as additional shares, to be paid at the time of vesting.

 

•  Payment is made in cash based on closing common stock price on the vesting date.

 

   
   

Stock options

  25%  

•  Strike price is equal to Chevron’s closing common stock price on the grant date.

 

•  Options vest and become exercisable at a rate of one-third per year for the first three years and expire 10 years after the grant date.

 

•  Gains realized depend on the Chevron common stock price at the time of exercise compared with the strike price.

 

•  Actual number of stock options granted is determined by dividing the proportionate value of the NEO’s LTIP award by the Black-Scholes option value on the grant date, consistent with the grant date fair value calculation as presented in the Summary Compensation Table.

 

       

 

Supplemental RSUs: Supplemental RSUs are granted in extraordinary circumstances to recognize exceptional individual performance that had a direct impact on Chevron’s results and to serve as an additional retention tool for such individuals. These RSUs generally vest at the end of three

years. Supplemental RSUs, if awarded, will accrue dividend equivalents that are reinvested as additional units and paid at the end of three years. No supplemental RSUs were awarded to any NEO in 2020.

 

 

52       Chevron Corporation—2021 Proxy Statement


Table of Contents
 

 

  executive compensation  

 

 

LTIP mix and timing – why a mix of performance shares, RSUs, and options

 

The MCC believes the current portfolio approach to the LTIP mix (50 percent performance shares, 25 percent restricted stock units, and 25 percent stock options) aligns with our business objectives and is consistent with industry practices. Each vehicle has its own risk-reward profile and a different time horizon. Together, these vehicles align our executives with stockholder interests over the long-term and reward them for absolute and competitive stock performance.

LOGO

 

 

2018–2020 performance share payout

The three-year performance period for performance shares granted in January 2018 ended on December 31, 2020. For this three-year period, Chevron ranked 3rd in TSR when compared with the LTIP Performance Share Peer Group, which includes the S&P 500 Total Return Index, resulting in a payout modifier of 120 percent. Combined with a lower stock price and dividend accrual, the overall payout represented 97 percent of the LTIP target.

The inclusion of S&P 500 Total Return Index was implemented in 2017 and has led to lower payout modifiers in both the 2017-2019 and 2018-2020 performance periods.

Refer to “Option Exercises and Stock Vested in Fiscal Year 2020” tables on pages 66 and 67 for details on the performance payout calculation.

LOGO

Note:

(1)

Per program rules, annualized returns based on average closing stock price for the 20 trading days prior to the beginning of the performance period (January 1, 2018) and the last 20 trading days of the performance period (ending December 31, 2020). Figures rounded.

 

 

2020 LTIP grants

In January 2020, the independent Directors, upon recommendation of the MCC, approved the LTIP award to the CEO and ratified the following LTIP awards to the other NEOs.

 

Name

 

2020

LTIP target value*

   

Performance
shares

   

RSUs

   

Stock
options

 

Michael K. Wirth

 

$

  15,500,000

 

 

 

70,220

 

 

 

35,110

 

 

 

298,100

 

Pierre R. Breber

 

$

 4,002,320

 

 

 

18,130

 

 

 

9,070

 

 

 

77,000

 

James W. Johnson

 

$

 5,197,500

 

 

 

23,550

 

 

 

11,770

 

 

 

100,000

 

Joseph C. Geagea

 

$

 4,002,320

 

 

 

18,130

 

 

 

9,070

 

 

 

77,000

 

Mark A. Nelson

 

$

 4,002,320

 

 

 

18,130

 

 

 

9,070

 

 

 

77,000

 

 

*

The number of awarded performance shares, RSUs, and stock options was determined based on the Company’s common stock price on January 29, 2020, the grant date Black-Scholes value for stock options, and a performance share factor of 100 percent reflecting expected performance at target. As these inputs may vary from those used for financial reporting, the target value shown above may not match the values presented in the “Summary Compensation Table” or the “Grants of Plan-Based Awards in Fiscal Year 2020” table in this Proxy Statement on pages 60 and 63, respectively.

 

Chevron Corporation—2021 Proxy Statement       53


Table of Contents

 

executive compensation  

 

 

 

2021 LTIP grants

In January 2021, the independent Directors, upon recommendation of the MCC, approved the LTIP award to the CEO and ratified the following LTIP awards to the other NEOs. The MCC and the independent Directors kept the CEO and other NEOs’ 2021 LTIP target values flat and made no change to the share calculation methodology. The number of shares increased modestly year-over-year due to a lower grant price. In addition, the MCC awarded Mr. Geagea a supplemental RSU grant of 18,150 shares in recognition of his extraordinary leadership in managing Chevron’s global COVID-19 pandemic response, serving as integration executive for the acquisition of Noble Energy Inc., and leading the enterprise-wide business restructuring, in addition to his regular responsibilities. This is the first supplemental RSU award to a NEO since 2016.

 

Name

 

2021

LTIP target value*

 

Performance
shares

 

RSUs

 

Stock
options

Michael K. Wirth

   

 

$15,500,000

   

 

87,870

   

 

43,930

   

 

317,100

Pierre R. Breber

   

 

$ 4,002,300

   

 

22,690

   

 

11,340

   

 

81,900

James W. Johnson

   

 

$ 5,197,500

   

 

29,460

   

 

14,730

   

 

106,300

Joseph C. Geagea

   

 

$ 5,603,200

   

 

22,690

   

 

29,490

   

 

81,900

Mark A. Nelson

   

 

$ 4,002,300

   

 

22,690

   

 

11,340

   

 

81,900

 

*

The number of awarded performance shares, RSUs, and stock options was determined based on the Company’s common stock price on January 27, 2021, the grant date Black-Scholes value for stock options, and a performance share factor of 100 percent reflecting expected performance at target. As these inputs may vary from those used for financial reporting, the target value shown above may not match the values presented in the 2022 Proxy Statement’s “Summary Compensation Table” or the “Grants of Plan-Based Awards in Fiscal Year 2021” table. Mr. Geagea’s LTIP target value and awarded RSU shares include the supplemental RSU grant.

2021 new performance share measure – relative ROCE improvement

Effective with 2021 performance share grant, the MCC approved adding Relative ROCE Improvement as a second performance measure to align the performance share payout with Chevron’s focus on increasing ROCE to sustain and grow the dividend. Performance shares continue to represent 50 percent of the LTIP grant value, with payout weighted 70 percent based on Relative TSR against the LTIP Performance Share Peer Group and 30 percent based on Relative ROCE Improvement against large-cap integrated energy companies (BP, ExxonMobil, Royal Dutch Shell, and Total).

 

 

 Relative ranking

 

 

 

1    

 

 

 

2    

 

 

 

3    

 

 

 

4    

 

 

 

 5    

 

 

 

6      

 

 

 Relative TSR

 (70% weight, ranking includes S&P 500 Index)

  200%   160%   120%   80%   40%   0%  

 

 Relative ROCE Improvement

 (30% weight, ranking excludes S&P 500 Index)

  200%   150%   100%   50%   0%   n/a  

The MCC continues to believe TSR should be the primary overall pay-for-performance measure to align our CEO’s and other NEOs’ performance with stockholder interests. It is objectively determined and allows for meaningful comparisons of our performance relative to other companies within the same industry, and to our stockholders’ other investment alternatives within the S&P 500 Index. Similar to TSR, ROCE is a standard performance measure by which stockholders measure a company’s performance, and it allows for meaningful comparisons relative to peers within our industry. The MCC believes that the addition of Relative ROCE Improvement as a performance measure further strengthens the Company’s alignment with stockholder interests and reinforces our focus on delivering higher returns.

retirement programs and other benefits

NEOs, like all other employees, have retirement programs and other benefits as part of their overall compensation package at Chevron. We believe these programs and benefits support our long-term investment cycle and encourage retention and long-term employment.

 

54       Chevron Corporation—2021 Proxy Statement


Table of Contents
 

 

  executive compensation  

 

 

retirement programs

All of our employees, including our NEOs, have access to retirement programs that are designed to enable them to accumulate retirement income. The defined benefit and defined contribution restoration plans allow highly compensated employees to receive the same benefits they would have earned without the IRS limitations on qualified retirement plans under the Employee Retirement Income and Security Act. The deferred compensation plan allows eligible employees to defer salary, CIP awards, and LTIP payouts.

 

Plan name

 

Plan type

 

How it works

 

What’s disclosed

Chevron Retirement Plan (“CRP”)  

Qualified
Defined

Benefit
(IRS §401(a))

  Participants are eligible for a pension benefit when they leave the Company as long as they meet age, service, and other provisions under the plan.   In the “Summary Compensation Table” and the “Pension Benefits Table” in this Proxy Statement, we report the change in pension value in 2020 and the present value of each NEO’s accumulated benefit under the CRP.

 

Chevron Retirement Restoration Plan (“RRP”)

 

 

Nonqualified
Defined
Benefit

 

 

Provides participants with retirement income that cannot be paid from the CRP due to IRS limits on compensation and benefits.(1)

 

 

In the “Pension Benefits Table” and accompanying narrative in this Proxy Statement, we describe how the RRP works and present the current value of each NEO’s accumulated benefit under the RRP.

 

Employee Savings Investment Plan (“ESIP”)

 

 

Qualified
Defined
Contribution
(IRS §401(k))

 

 

Participants who contribute a percentage of their annual compensation (i.e., base salary and CIP award) are eligible for a Company matching contribution, up to annual IRS limits.(2)

 

 

In the footnotes to the “Summary Compensation Table” in this Proxy Statement, we describe Chevron’s contributions to each NEO’s ESIP account.

 

Employee Savings Investment Plan— Restoration Plan (“ESIP-RP”)

 

 

Nonqualified

Defined
Contribution

 

 

Provides participants with an additional Company matching contribution that cannot be paid into the ESIP due to IRS limits on compensation and benefits.(3)

 

 

In the footnotes to the “Nonqualified Deferred Compensation Table” in this Proxy Statement, we describe how the ESIP-RP works. In the “Summary Compensation Table” and the “Nonqualified Deferred Compensation Table,” we present Chevron’s contributions to each NEO’s ESIP-RP account.

 

Deferred Compensation Plan (“DCP”)

 

 

Nonqualified
Defined
Contribution

 

 

Participants can defer up to:

• 90 percent of CIP awards and LTIP performance share payouts; and

• 40 percent of base salary above the IRS limit (IRS §401(a)(17)) for payment after retirement or separation from service.

 

 

In the “Nonqualified Deferred Compensation Table” in this Proxy Statement, we report the aggregate NEO deferrals and earnings in 2020.

 

(1)

IRS annual compensation limit was $285,000 in 2020.

 

(2)

Participants who contribute at least 2 percent of their annual compensation to the ESIP receive a Company matching contribution of 8 percent (or 4 percent if they contribute 1 percent).

 

(3)

Participants who contribute at least 2 percent of their base salary to the DCP receive an ESIP-RP Company matching contribution of 8 percent of their base salary that exceeds the IRS annual compensation limit.

The change in pension value disclosed in the Summary Compensation Table on page 60 is not a current cash payment. It represents the change in the NEOs’ calculated pension value, which is paid only after retirement. The values remained high in 2020, due to actuarial factors beyond the normal salary increases and age/service increments:

 

 

Lower interest rates, which increased the present value of pension benefits; and

 

 

Promotional pay increases, notably for Mr. Wirth who became CEO in February 2018

Pension values will continue to fluctuate up or down in any given year until an NEO’s retirement, based on the actuarial factors described in further detail in the footnotes to the Summary Compensation Table on page 61. Among the factors discussed, we anticipate that the impact of Mr. Wirth’s CEO promotional pay increase has now been largely accounted for in the pension value and will level off in future years. As a result, the Company expects to report a substantially lower CEO pension accrual for 2021 and in future years, assuming other factors such as interest rates remain stable.

benefit programs

The same health and welfare programs, including post-retirement health care, that are broadly available to employees on our U.S. payroll also apply to NEOs, with no other special programs except executive physicals (as described below under Perquisites).

perquisites

We provide limited perquisites to eligible members of senior management, including the NEOs, as discussed below.

Ensuring the safety and security of our Chairman and CEO, Mr. Wirth, and the other NEOs is of critical importance to Chevron. Accordingly, perquisites include business-related security measures; in particular, these security measures include residential

 

Chevron Corporation—2021 Proxy Statement       55


Table of Contents

 

executive compensation  

 

 

 

and personal security and the aggregate incremental costs to Chevron for personal use of Chevron automobiles and corporate aircraft to ensure secure travel and protection. For security reasons, the Board has mandated that Mr. Wirth fly on the corporate aircraft for all business and personal travel whenever it is feasible, and Mr. Wirth is also provided with access to Chevron’s cars, drivers, and security personnel for both business and personal use.

Further, consistent with peer practice and as part of our standard employee benefit package, we provide financial counseling services pursuant to Chevron’s Financial Counseling Program to approximately 300 eligible members of senior management, including the NEOs, to assist them in obtaining professional advice on personal financial matters. We also provide executive physicals to approximately 50 eligible members of senior management, including the NEOs, to promote overall health and wellness.

The MCC periodically reviews our practices and disclosures with respect to perquisites. In footnote 6 to the “Summary Compensation Table” of this Proxy Statement on page 62, we report the value of each NEO’s perquisites for 2020, as well as additional details regarding these perquisites.

 

56       Chevron Corporation—2021 Proxy Statement


Table of Contents
 

 

  executive compensation  

 

 

best practice in compensation governance

To ensure independent oversight, stockholder alignment, and long-term sustainability, our executive compensation program has the following governance elements in place.

 

 

  What we do

 

     

 

What we do not do

 

 

 

 

 

Robust stockholder engagement plan to ensure alignment with stockholder interests

 

 

   

 

û

 

 

 

No excessive perquisites; all have a specific business rationale

 

 

 

 

 

Stock ownership guidelines for the Chief Executive Officer, six times base salary; for the Executive Vice Presidents and Chief Financial Officer, four times base salary

 

   

 

û

 

 

 

No individual supplemental executive retirement plans

 

 

 

 

 

Deferred accounts inaccessible until a minimum of one year following termination

 

 

   

 

û

 

 

 

No stock option repricing, reloads or exchanges without stockholder approval

 

 

 

 

 

 

 

Clawback provisions included in the CIP, LTIP, DCP, RRP, and ESIP-RP for misconduct

 

 

   

û

 

 

 

No loans or purchases of Chevron equity securities on margin

 

 

 

 

 

 

Significant CEO pay at risk (92 percent)

 

   

 

û

 

 

 

No transferability of stock options (except in the case of death or a qualifying court order)

 

 

 

 

 

 

Thorough assessment of Company and individual performance

 

 

   

 

û

 

 

 

No stock options granted below fair market value

 

 

  Robust succession planning process with Board review twice a year    

û

 

 

No hedging or pledging of Chevron equity securities

 

 

 

 

MCC composed entirely of independent Directors

 

   

 

û

 

 

 

No change-in-control agreements for NEOs

 

 

 

 

 

Independent compensation consultant, hired by and reports directly to the MCC

 

 

   

û

 

 

 

 

No tax gross-ups for NEOs

 

 

 

 

 

 

MCC has discretion to reduce performance share payouts

 

 

   

û

 

 

 

 

No “golden parachutes” or “golden coffins” for NEOs

 

 

 

 

 

Annual assessment of incentive compensation risks

 

 

     

 

Chevron Corporation—2021 Proxy Statement       57


Table of Contents

 

executive compensation  

 

 

 

compensation governance: oversight and administration of the executive compensation program

role of the board of directors’ management compensation committee

 

The MCC oversees the executive compensation program. The MCC is supported by the independent compensation consultant, Meridian Compensation Partners, LLC (“Meridian”), and management to review pay and performance relative to the Business Plan approved by the Board and to industry peers. The MCC solicits input from the CEO concerning the performance and compensation of other NEOs. The CEO  

does not participate in discussion about his own pay; and proposed changes to the compensation of the CEO is recommended by the MCC and approved by the independent Directors of the Board. A complete description of the MCC’s authority and responsibility is provided in its charter, which is available on our website at www.chevron.com and in print upon request.

 

 

independent compensation advice

 

The MCC retains Meridian as an independent compensation consultant to assist with its duties. The MCC first engaged Meridian in 2014, following a comprehensive request-for-proposal process and subsequent screening and selection. The MCC has the exclusive right to select, retain, and terminate Meridian, as well as to approve any fees, terms, and other conditions of its service. Meridian and its lead consultant report directly to the MCC, but when directed to do so by the MCC, they work cooperatively with Chevron’s management to develop analyses and proposals for the MCC. Meridian provides the following services to the MCC:

 

 

Education on executive compensation trends within and across industries;

 

Recommendation regarding compensation philosophy and compensation levels;

 

 

Selection of compensation comparator groups; and

 

 

Identification and resolution of technical issues associated with executive compensation plans, including tax, accounting, and securities regulations.

Meridian does not provide any services to the Company. The MCC is not aware of any work performed by Meridian that raised any conflicts of interest.

 

 

compensation risk management

 

The MCC annually undertakes a risk assessment of Chevron’s compensation programs to determine whether these programs are appropriately designed and to ensure that they do not motivate individuals or groups to take risks that are reasonably likely to have a material adverse effect on the Company. Following its most recent                    

comprehensive review of the design, administration, and controls of these programs, the MCC was satisfied that Chevron’s programs are well structured with strong governance and oversight mechanisms in place to minimize and mitigate potential risks.

 

 

stock ownership guidelines

We require our NEOs to hold prescribed levels of Chevron common stock, further linking their interests with those of our stockholders. Executives have five years to attain their stock ownership guideline. Further, NEOs who have not attained their stock ownership guidelines are required to hold shares acquired under the LTIP program until such ownership requirements are met.

 

Position

  

2020 ownership guidelines    

CEO

  

    Six times base salary

Executive Vice Presidents and CFO

  

    Four times base salary

All Other Executive Officers

  

    Two times base salary

Based upon our 250-day trailing average stock price ending December 31, 2020 ($87.87), Mr. Wirth had a stock ownership base salary multiple of 8.9. All other NEOs met their respective ownership requirement and had an average stock ownership base salary multiple of 7.1. The MCC believes these ownership levels provide adequate focus on our long-term business model.

employment, severance, and change-in-control agreements

In general, we do not maintain employment, severance, or change-in-control agreements with our NEOs. Upon retirement or separation from service for other reasons, NEOs are entitled to certain accrued benefits and payments generally available to other employees. We describe these benefits and payments in the “Pension Benefits Table,” the “Nonqualified Deferred Compensation Table,” and the “Potential Payments Upon Termination or Change-in-Control” table in this Proxy Statement.

 

58       Chevron Corporation—2021 Proxy Statement


Table of Contents
 

 

  executive compensation  

 

 

compensation recovery policies

The Chevron Incentive Plan, Long-Term Incentive Plan, Deferred Compensation Plan, Retirement Restoration Plan, and Employee Savings Investment Plan–Restoration Plan include provisions permitting us to “claw back” certain amounts of cash and equity awarded to an NEO at any time if the NEO engages in certain acts of misconduct, including, among other things: embezzlement; fraud or theft; disclosure of confidential information or other acts that harm our business, reputation or employees; misconduct resulting in Chevron having to prepare an accounting restatement; and failure to abide by post-termination agreements respecting confidentiality, non-competition, or non-solicitation.

hedging and pledging

Under our insider trading policy, our NEOs are prohibited from hedging and pledging Chevron securities, as described in more detail on page 31.

tax gross-ups

We do not pay tax gross-ups to our NEOs. We do provide standard expatriate packages, which include tax equalization payments, to all employees of the Company who serve on overseas assignments, including executive officers.

tax deductibility of NEO compensation

For years prior to 2018, Section 162(m) of the Internal Revenue Code (“Code”) limited companies’ deduction for compensation paid to the CEO and the other three most highly paid executives (excluding the CEO and CFO) to $1 million, but allowed for the deduction for performance-based compensation costs/expenses for amounts even in excess of the $1 million limit. Effective January 1, 2018, the Tax Cut and Jobs Act (“TCJA”) repealed this exclusion for performance-based compensation and expanded the class of affected executives, which means that all compensation paid to persons who in 2017, or any year following, were the CEO, CFO (in 2018 or later) or one of the other three most highly paid executives (excluding our CEO and CFO) will be subject to the cap of $1 million. For LTIP awards made on or prior to November 2, 2017, but not yet vested and/or paid out (other than time-based RSUs, which are not qualified under Section 162(m) and therefore are not deductible unless paid after the executive terminates), we expect that the Company will still be able to deduct those amounts, provided that the Company meets the requirements in the TCJA. In January 2021, the Board amended and restated the CIP to remove outdated terms that were designed to allow awards under the CIP to satisfy conditions in Section 162(m) of the Code that were repealed in 2017 by the TCJA.

 

Chevron Corporation—2021 Proxy Statement       59


Table of Contents

 

executive compensation  

 

 

 

summary compensation table

The following table sets forth the compensation of our NEOs for the fiscal year ended December 31, 2020, and for the fiscal years ended December 31, 2019, and December 31, 2018, if they were NEOs in those years. The primary components of each NEO’s compensation are also described in our “Compensation Discussion and Analysis” in this Proxy Statement.

 

Name and

principal position

  Year  

Salary

($)(1)

 

Stock
awards

($)(2)

 

Option
awards

($)(3)

 

Non-Equity
incentive plan
compensation

($)(4)

 

 

Change in
pension

value and
nonqualified
deferred
compensation
earnings

($)(5)

 

All other
compensation

($)(6)

 

Total

($)

   

M.K. Wirth,

Chairman and CEO

   

 

2020

   

$

1,635,417

   

$

11,248,191

   

$

3,875,300

   

 

   

 

$ 11,414,991

   

 

$ 842,787

   

$

29,016,686

   

 

 

 

2019

 

   

 

$

 

1,570,833

 

   

 

$

 

11,663,631

 

   

 

$

 

3,750,127

 

   

 

 

 

$ 2,280,000

 

   

 

 

 

$ 13,383,378

 

   

 

 

 

$ 422,693

 

   

 

$

 

33,070,662

 

   

 

 

 

 

2018

 

 

 

   

 

$

 

 

1,468,750

 

 

 

   

 

$

 

 

10,102,641

 

 

 

   

 

$

 

 

3,312,399

 

 

 

   

 

 

 

 

$ 3,600,000

 

 

 

   

 

 

 

 

$   1,229,552

 

 

 

   

 

 

 

 

$ 927,281

 

 

 

   

 

$

 

 

20,640,623

 

 

 

   

P.R. Breber,

Vice President and

Chief Financial Officer

   

 

2020

   

$

1,014,167

   

$

2,904,706

   

$

1,001,000

   

 

   

 

$   3,327,613

 

   

 

$ 105,728

   

$

8,353,214

   

 

 

 

2019

 

   

 

$

 

988,917

 

   

 

$

 

3,081,375

 

   

 

$

 

990,958

 

   

 

 

 

$ 1,045,000

 

   

 

 

 

$   5,222,222

 

   

 

 

 

$   91,948

 

   

 

$

 

 11,420,420

 

   

 

 

 

 

2018

 

 

 

   

 

$

 

 

948,875

 

 

 

   

 

$

 

 

2,934,703

 

 

 

   

 

$

 

 

962,251

 

 

 

   

 

 

 

 

$ 1,629,600

 

 

 

   

 

 

 

 

$   1,445,807

 

 

 

   

 

 

 

 

$ 108,808

 

 

 

   

 

$

 

 

8,030,044

 

 

 

   

J.W. Johnson,

Executive Vice President,

Upstream

   

 

2020

   

$

1,207,083

   

$

3,771,805

   

$

1,300,000

   

 

   

 

$   3,765,630

   

 

$ 157,538

   

$

10,202,506

   

 

 

 

2019

 

   

 

$

 

1,180,458

 

   

 

$

 

4,003,471

 

   

 

$

 

1,286,979

 

   

 

 

 

$ 1,231,200

 

   

 

 

 

$   7,479,507

 

   

 

 

 

$ 134,015

 

   

 

$

 

15,315,630

 

   

 

 

 

 

2018

 

 

 

   

 

$

 

 

1,123,375

 

 

 

   

 

$

 

 

3,811,432

 

 

 

   

 

$

 

 

1,249,653

 

 

 

   

 

 

 

 

$ 2,284,100

 

 

 

   

 

 

 

 

$   2,263,287

 

 

 

   

 

 

 

 

$ 194,135

 

 

 

   

 

$

 

 

10,925,982

 

 

 

   

J.C. Geagea,

Executive Vice President,

Technology, Projects &

Services

   

 

2020

   

$

1,014,167

   

$

2,904,706

   

$

1,001,000

   

 

   

 

$   2,929,733

 

   

 

$ 102,652

   

$

7,952,258

   

 

 

 

2019

 

   

 

$

 

994,750

 

   

 

$

 

3,081,375

 

   

 

$

 

990,958

 

   

 

 

 

$    992,800

 

   

 

 

 

$   6,535,781

 

   

 

 

 

$ 414,139

 

   

 

$

 

13,009,803

 

   

 

 

 

 

2018

 

 

 

   

 

$

 

 

979,083

 

 

 

   

 

$

 

 

2,934,703

 

 

 

   

 

$

 

 

962,251

 

 

 

   

 

 

 

 

$ 1,663,500

 

 

 

   

 

 

 

 

$   1,210,881

 

 

 

   

 

 

 

 

$   98,993